TSX heads for negative session as IMF cuts global outlook

U.S. futures were little changed after racking up minor losses Monday as traders also looked to the start of the third-quarter earnings season with resource giant Alcoa Inc. set to report after the close. The Dow Jones industrial futures added three points to 13,504, the Nasdaq futures were down 3.2 points to 2,774.2 while the S&P 500 futures gained a point to 1,450.8.

Traders were cautious amid a report from the International Monetary Fund that downside economic risks have increased and are considerable.

It said Tuesday in a quarterly update of its World Economic Outlook that the global economy will expand 3.3% this year, down from the estimate of 3.5% growth it issued in July. Its forecast for growth in 2013 is 3.6%, down from 3.9% three months ago and 4.1% in April.

The IMF added that the global economic malaise is spreading to more dynamic emerging economies such as China.

It said that China’s economy will likely expand 7.8% this year, down from July’s eight per cent forecast.

Commodity prices were stable after registering losses Monday in the wake of a pessimistic outlook from the World Bank. The organization cut its forecasts for economic expansion in East Asia, saying it expected the region to grow by 7.2% in 2012, down from a projection of 7.6% in May.

On Tuesday, the November crude contract on the New York Mercantile Exchange rose 79 cents to US$90.12 a barrel.

Oil had slipped the previous three sessions but found support Tuesday, partly on supply concerns linked to the Syrian conflict.

A report from Commerzbank in Frankfurt said there are supply risks since Turkey might become involved in the conflict.

December gold gained $2.20 to US$1,777.90 an ounce while December copper rose two cents to US$3.74 a pound.

Meanwhile, Alcoa is expected to post third quarter earnings at break-even on a per-share basis, down from 14 cents a share a year ago. The company is seen as an economic bellwether as its products are used in a wide variety of industries, from auto makers to appliance manufacturers.

On the economic front, fresh data showed continued strength in the Canadian housing sector. Canada Mortgage and Housing Corp. said housing starts came in at an annualized rate of 220,000 in September, much stronger than the 205,000 that economists had expected.

European markets were mixed as London’s FTSE 100 index slipped 0.18%, Frankfurt’s DAX was down 0.34% while the Paris CAC 40 gained 0.22%.

In Asia, Hong Kong’s Hang Seng rose 0.5% while South Korea’s Kospi fell 0.1%, Australia’s S&P/ASX 200 gained 0.5% and Japan’s Nikkei 225 index tumbled 1.1%.

Chinese stocks rose after the country’s central bank injected 265 billion yuan (US$42 billion) into the money supply in what analysts said was the second-biggest such move to date.

In addition, China’s sovereign wealth fund said it would buy millions of shares in Industrial & Commercial Bank of China, the world’s biggest bank by market capitalization.

The Shanghai Composite Index climbed two per cent.