Source: The Canadian Press

The tone on the Toronto stock market this week will likely be set by the commodity sectors amid volatile oil prices because of unrest in Egypt and surging copper prices.

In a week of little new economic data, investors will also be looking to a string of earnings reports from Canadian and U.S. corporations.

Oil prices moved up as much as seven per cent last week, closing as high as US$92 as traders worried the Suez Canal could be shut and that the political unrest could spread to other oil-rich countries in the region.

But there are doubts those levels can be sustained.

“I wouldn’t be surprised to see oil back trading under US$90 (this) week, that’s my own gut feeling,” said John Kurgan at Lind Waldock, noting that oil prices bumped against the US$92 level at the start of the year and then with the Egyptian crisis.

At the same time, Kurgan added that volatility in oil prices will likely continue.

“This is not something that’s going to resolve itself near term,” he said. “This is fluid, this is going to take awhile to settle.”

On Friday, prices headed down US$1.50 to US$89.03 a barrel as hopes rose for an end to the political protests in Egypt.

The energy sector benefited from the higher prices, running up 1.6% last week.

The base metals sector finished up a modest 0.65% last week as copper hit new record highs of US$4.58 a pound on higher demand and supply concerns.

“This is strictly a pure supply/demand equation, it’s not any fear it’s just strong demand for the need of copper everywhere,” Kurgan said.

“It’s trading at around US$4.60 a pound (and) I thought I would never see this sort of level and I’ve been doing this for 26 years. “

Meanwhile, a handful of big U.S. companies are expected to report quarterly earnings including toymaker Hasbro and home improvement retailer Lowe’s on Monday, Walt Disney Co. on Tuesday, the Coca-Cola Co. on Wednesday and PepsiCo and Kraft on Thursday.

In Canada, investors will take in earnings from Teck Resources (TSX:TCK.B) on Tuesday.

Fertilizer producer Agrium (TSX:AGU), WestJet Airlines (TSX:WJA) and lumber producer Canfor (TSX:CFP) report on Wednesday.

Thursday is the busiest day of the week for Canadian corporate earnings as investors will pore over results from Thomson Reuters (TSX:TRI), BCE Inc. (TSX:BCE), Air Canada (TSX:AC.B), Shoppers Drug Mart (TSX:SC) and natural gas producer EnCana Corp. (TSX:ECA).

The weeks wraps up with earnings from uranium miner Cameco (TSX:CCO) on Friday.

Last week, job creation in the U.S. came in at a paltry 36,000, much lower than the 131,000 or so that economists had expected. However, the unemployment rate ran down from 9.4% in December to nine per cent last month.

“It looks like weather played an important role here and that it dampened employment very significantly,” said John Johnston, chief strategist at the Harbour Group at RBC Dominion Securities.

“The trend in underlying job creation remains positive, it’s being distorted downward by the weather right now, that could persist into February depending on how things evolve.”

Johnston said it is important to remember that the jobs report was out of line with other more positive bits of data that have been released recently.

The Institute for Supply Management’s readings on the manufacturing and service sectors last week showed much greater than expected expansion.

On the economic front, data this week centres on trade.

In Canada, economists expect the December merchandise trade deficit to come in at about $300 million, slightly worse than the $80 million figure for November, but also a long way from the record $2.4-billion deficit last July.

“With U.S. auto sales beginning to slowly recover, and spending perking up, Canadian exports should also rebound more forcefully,” said a commentary from CIBC World Markets.

The TSX gained 2.6% last week, paced by gains in energy, mining and financial stocks while strong readings on the U.S. manufacturing and service sectors helped push the Dow industrials up 2.2%.