Source: The Canadian Press

Resource stocks could be a drag on the Toronto stock market Wednesday as oil and metal prices fell back amid a stronger American dollar and worries about Chinese demand for commodities.

The Canadian dollar slipped 0.01 of a cent to 98.86 cents US.

U.S. futures indicated a flat open to the trading day as investors also considered earnings from Costco Wholesale Corp. The Dow Jones futures declined nine points to 11,346, the Nasdaq futures gained 4.25 points to 2,194 while the S&P 500 futures were off 1.1 points to 1,222.

Oil prices moved lower after hitting a two-year high of over US$90 a barrel during Tuesday’s session before a wave of profit taking pulled prices lower. On Wednesday, the January crude contract on the New York Mercantile Exchange fell 70 cents to $US$87.99 a barrel partly on speculation that China may raise interest rates to keep inflation down.

The fears Wednesday were spurred by rumours that the increase in the consumer price index topped 5% in November. Official Chinese inflation figures are to be released on Monday.

“Too many rumours about high CPI data are floating around, and that makes investors nervous about uncertainties in monetary and economic policies. Everyone is naturally getting cautious,” said Yang Yining, an analyst at Capital Edge Investment & Management Co. in Shanghai.

Metal prices also moved lower with the March copper contract on the Nymex off a penny to US$4.04 a pound while the February bullion contract faded $16 to US$1,393 an ounce.

Strong economic performance from China and other emerging markets has helped the resource heavy TSX charge ahead about 13% year to date.

On the earnings front, Costco Wholesale Corp.’s profit climbed 17% to US$312 million or 71 cents a share in its first fiscal quarter on increased revenue from membership fees and strong results overseas.

The results topped analysts’ average forecast of 69 cents per share, according to a survey by Thomson Reuters. The estimates normally exclude one-time items.

Revenue rose 11% to US$19.24 billion.

Canadian discount retailer Dollarama Inc. (TSX:DOL) reported that third-quarter net income rose to $31.3 million from $1.1 million a year ago, as sales increased 13.7% to $355.7 million.

Major Drilling Group International Inc. (TSX:MDI) says it had $127.8 million in revenue during the quarter ended Oct. 31. That’s up 69% from $75.5 million in the comparable quarter a year ago.

Home Depot Inc. is raising its fiscal 2010 earnings-per-share guidance for the second time in two months. The No. 1 U.S. home-improvement retailer now expects net income from continuing operations to be US$1.97 per share. That’s up from prior guidance of US$1.94 per share. Analysts also predict US$1.94 per share.

The company now expects revenue to rise 2.3%, up from the 2.2% rise expected previously, implying revenue of US$67.7 billion. Analysts expect revenue of US$67.59 billion.

In overseas trading, China’s benchmark Shanghai Composite Index lost 1%.

Elsewhere, South Korea’s Kospi slipped 0.4% and Hong Kong’s Hang Seng lost 1.4%.

London’s FTSE 100 index slipped 0.08%, Frankfurt’s DAX was off 0.17% and the Paris CAC 40 rose 0.36%.