The Toronto stock market headed for a higher open Friday following moves by the European Central Bank to lighten the cost of borrowing for eurozone countries by buying government bonds.
However, the tone of the trading day will be set by the contents of the U.S. government’s non-farm payrolls report for August. Expectations are modest – economists looked for the American economy to have created about 125,000 jobs last month.
The Canadian dollar was up 0.14 of a cent to 100.89 cents US as traders also looked to the release of domestic jobs data. The consensus called for the economy to have cranked out around 11,000 jobs in August.
U.S. futures were higher with the Dow Jones industrial futures ahead 44 points to 13,319, the Nasdaq futures advanced 9.75 points to 2,835.25 and the S&P 500 futures gained six points to 1,437.
The U.S. job creation figures could be more important this month than most because they come in the middle of the U.S. presidential campaign and as the Federal Reserve mulls the possibility of another monetary stimulus. Previous easing measures by the Fed have supported financial markets.
The Fed’s intentions could become clearer next week when the central bank holds its next interest rate meeting.
North American markets registered solid gains Thursday in the wake of the ECB’s move to get a grip on the eurozone’s debt crisis.
The plan amounts to a commitment to buy unlimited amounts of short-term bonds from euro countries that request help. Ostensibly, the plan is meant to ease the financial pressures on Spain and Italy by giving them time to reduce their debt and reform their economies.
The ECB had been pressured to take action after Spain and Italy became the latest countries forced to pay yields in the seven per cent range on their benchmark 10-year bonds earlier this year, a level that raised worries those countries could be forced to seek a bailout.
The ECB plan seemed to be working Friday as Spain saw its cost of borrowing fall.
Investors think Spain will make a formal request to tap the new program within weeks, which could ease the pressures in the eurozone’s fourth-largest economy.
The yield on Spain’s 10-year bond fell another 0.21 percentage point Friday to 5.80%, the first time it’s gone below 6% since May.
Commodity prices ran ahead on hopes that greater financial stability in Europe will help the region get out of its economic slump and hopefully hike demand for oil and metals.
The October crude contract on the New York Mercantile Exchange gained 63 cents to US$96.16 a barrel.
September copper ran ahead seven cents to US$3.59 a pound.
Bullion prices slipped with the December contract down $8.10 to US$1,697.50 an ounce.
European bourses advanced with London’s FTSE 100 index ahead 0.32% and Frankfurt’s DAX up 1% as data showed that German exports inched up unexpectedly in July and industrial production also rose more than expected despite signs Europe’s financial crisis is beginning to take its toll on its largest economy.
Exports rose 0.5% in July from the previous month.
And industrial production rose by 1.3% in July over the previous month.
The Paris CAC 40 gained 1.22%.
Asian markets rallied strongly on the ECB bond buying announcement as Japan’s Nikkei 225 index surged 2.2%, Hong Kong’s Hang Seng jumped 3.1% in its biggest one-day percentage gain since Jan. 17. South Korea’s Kospi bolted up 2.6% while Australia’s S&P/ASX 200 rose 0.3%.
Mainland Chinese shares soared. The benchmark Shanghai Composite Index jumped 3.7% and the smaller Shenzhen Composite Index added 3.8%.
In corporate news, Lululemon Athletica Inc. (TSX:LLL) reported quarterly net earnings were $57.2 million or 39 cents per share. That compared with net earnings of $38.4 million or 26 cents per share in the second quarter of fiscal 2011. The Vancouver-based activewear retailer also reported revenue up 33% to $282.6 million. It also raised its full year revenue projection.