TSX heads for weak open

The loonie was down 0.22 of a cent to 98.65 cents US after inflation fell sharply last month, down 0.6% from November to an annualized rate of just 2.3%.

Analysts had expected prices to cool in December due to Christmas season sales, but not by this much. The consensus was for a 0.4% falloff.

“Soggy consumer confidence clearly prompted some heavy duty price cuts in discretionary goods.” said BMO Capital Markets deputy chief economist Doug Porter.

“The bottom line is quite straightforward — this year’s holiday shopping season saw incredibly intense discounting, and almost across the board. Even the auto dealers got into the act.

U.S. futures were mainly lower with the Dow Jones industrial futures off one point to 12,586, the Nasdaq futures gained 5.2 points to 2,430.5 and the S&P 500 futures lost 0.9 of a point to 1,309.5.

Industrial conglomerate General Electric said Friday that its fourth-quarter earnings fell 18% to US$3.73 billion. Excluding discontinued businesses and certain pension costs, earnings were 39 cents a share, a penny better than estimates. But revenue came in at $37.97 billion, below Wall Street’s US$40.05 billion estimate and shares fell 2.75% in premarket trading.

Intel Corp., the world’s largest chip-maker, topped analyst expectations after it reported Thursday that its profit rose six per cent in the latest quarter to US$3.36 billion, even as hard-drive shortages held back computer sales.

The company also provided a forecast for the new quarter that matched analyst expectations and its shares edged up 0.62% in pre-market trading.

And IBM Corp.’s fourth-quarter earnings handily beat Wall Street’s expectations on Thursday, coming in at US$5.49 billion, helped by higher revenue and profit margins in the technology icon’s lucrative software and services segments. It shares rose 2.62% in pre-market trading.

Meanwhile, oil prices continued to lose ground as signs of economic improvement in the U.S. and Europe were tempered by a rise in gasoline stocks, which suggests weaker demand for crude.

The February crude contract on the New York Mercantile Exchange dropped 56 cents to US$99.83 a barrel.

Metal prices also backed away with March copper down five cents to US$3.76 a pound, reversing Thursday’s gain.

And the February gold contract on the Nymex lost $7 to US$1,647.50 an ounce.

Traders also kept an eye on debt-reduction talks between Greece and its private creditors that could determine whether Europe’s debt crisis flares up again.

Prime Minister Lucas Papademos met for a third day with negotiators from the Institute of International Finance, which represents the private creditors who are being asked to take a loss on their bondholdings to lighten Greece’s debt load by €100 billion.

An agreement is needed if Greece is to get the next batch of bailout cash that would prevent a devastating debt default — Greece does not have enough money to cover a €14.5 billion bond repayment in March.

European markets were weak with London’s FTSE 100 index up 0.01%, Frankfurt’s DAX dipped 0.05% and the Paris CAC 40 were down 0.5%.

Earlier in Asia in the last trading day before Chinese New Year holidays begin Monday, the Shanghai Composite Index climbed one per cent, Japan’s Nikkei 225 index rose 1.5%, Hong Kong’s Hang Seng added 0.8% and South Korea’s Kospi jumped 1.8% to 1,949.89.