TSX heads for positive open after Alcoa reassures on earnings

U.S. futures were sharply higher after the largest U.S. aluminum manufacturer said Tuesday after the market close that it earned 10 cents a share in the first quarter against expectations of a four cent a share loss. Alcoa is considered a barometer for the U.S. economy as it sells its aluminum to a wide range of customers, including car makers and aircraft manufacturers.

Alcoa also reaffirmed its forecast of a seven per cent increase in 2012 global aluminum demand and its shares were ahead almost six per cent in pre-market trading in New York.

The Dow Jones industrial futures jumped 85 points to 12,765, the Nasdaq futures gained 19.5 points to 2,716.5 and the S&P 500 futures rose 10.7 points to 1,367.8.

North American markets finished lower for a fifth straight session Tuesday, with investors sidelined amid data from China indicating a slowdown in imports and exports while Spain saw its 10-year bond yield hit four-month highs of over 5.9%.

But traders have also been nervous about how the first quarter earnings season will play out.

During the first quarter, analysts expectations for earnings for companies in the Standard & Poor’s 500 index went from an increase of about three per cent to a decline of 0.1%, according to FactSet.

Such a dip would follow three straight years of strong double digit earnings growth.

Tuesday’s losses erased all gains on the TSX for 2012, leaving the main index about 20 points shy of where it started the year.

The European debt crisis continued in focus Wednesday as Italy’s borrowing costs more than doubled in a pair of bond auctions due to renewed market uncertainty about debt and growth prospects among the 17-nation eurozone’s weakest members.

Italy easily sold €8 billion in 12-month bonds but the interest rate investors demanded rose to 2.84% from 1.40% last month. The government also sold €3 billion in three-month bonds, with the borrowing costs rising to 1.25% from 0.49%.

The borrowing rates of Italy and other financially shaky countries like Spain had eased in recent months after the European Central Bank gave banks emergency loans and the technical government of Mario Monti implemented austerity measures.

However, that lending program by the ECB expired at the end of March.

Meanwhile, traders also considered the fallout from a massive earthquake off Indonesia’s western coast which triggered tsunami fears across the Indian Ocean.

The U.S. Geological Survey said the first 8.6-magnitude quake was centred 33 kilometres beneath the ocean floor around 434 kilometres from Indonesia’s Aceh province. A 2004 tsunami killed 170,000 people in that province alone.

Commodities were mixed after demand concerns sent prices for oil and metals lower on Tuesday.

The May crude contract on the New York Mercantile Exchange gained 35 cents to US$101.37 a barrel.

Copper prices continued to lost ground in the wake of the weak Chinese data, falling a penny to US$3.64 a pound. Prices for copper, which is viewed as an economic barometer as it is used in so many businesses, have tumbled about seven per cent in the past week.

Gold bullion dipped $1.60 to US$1,659.10 an ounce.

European markets were positive with London’s FTSE 100 index ahead 0.71%, Frankfurt’s DAX gained 1.32% and the Paris CAC 40 advanced 1.18%.

Earlier in Asia, worries about the European debt crisis helped send shares mostly lower.

Tokyo’s Nikkei 225 fell 0.8%, Hong Kong’s Hang Seng dropped 1.1% and Seoul’s Kospi edged 0.1% lower.

Chinese shares traded in a narrow range, as investors awaited the release later in the week of GDP data and other indicators. The Shanghai Composite Index edged 0.1% higher.

Markets will be closely watching for first quarter gross domestic product results, starting with China on Friday. China lowered its GDP growth target last month to 7.5%, sparking concern the world’s second-largest economy is slowing faster than expected.

In Canadian earnings news, Astral Media Inc. (TSX:ACM.A) had a $38.2-million profit in its second quarter, a 10% increase over the same period a year earlier. Revenue for the Montreal-based radio, television and outdoor advertising company was up slightly, rising to $233.5 million from $232.7 million.

Dollarama Inc. (TSX:DOL) says its net income soared 51% to $63.6 million or 84 cents per diluted share in its fiscal fourth quarter, up from $42 million or 56 cents per share a year earlier. The discount chain’s sales jumped 14.7% to $468.7 million, mainly due to the addition of 52 stores during the year.