Source: The Canadian Press

Investors will have plenty to focus on this week as the third-quarter Canadian earnings season kicks into gear and the latest economic growth figures are released for Canada and the U.S.

Earnings news will be centred around the resource sector, including railways, although investors will also take in the latest quarterly reports from Rogers Communications Inc. (TSX:RCI.B) on Tuesday and Corus Entertainment (TSX:CJR.B) on Wednesday.

“We will have a far better sense of how things are at the end of next week because we just have so many companies reporting,” said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.

“I think it’s going to vary by industry but so far I have to say that the results that have been reported in the U.S. and the few reported so far in Canada have come out pretty well in terms of earnings exceeding estimates and not having as many revenue shortfalls as we had in the first and second quarters.”

Among the heavyweights reporting this week is Canadian National Railways (TSX:CNR) on Tuesday and it’s hoped CN, with a huge presence in the U.S., will release strong earnings as its U.S. competitors CSX and Union Pacific did earlier this month.

“The improvement in the operating ratio that Union Pacific reported was just outstanding. Their operating expenses ratio dropped by about five percentage points,” said Raschkowan.

“A lot of people will be looking at CN and CP to see what kind of numbers they can post but the expectation will be that the numbers will be good.”

Canadian Pacific Railway (TSX:CP) reports results on Wednesday.

Analysts expect CN’s earnings per share for the third quarter will come in at $1.09, up from 86 cents a year ago, while CP’s third-quarter EPS is forecast at $1.14, up from 77 cents a year ago.

Investors also have high hopes for Teck Resources (TSX:TCK.B) when the copper and coal miner reports results on Tuesday. Analysts are looking for earnings per share of 94 cents, up from 54 cents for the same quarter a year ago.

Not only are copper prices at a two-year high but “I think coal prices have generally been better than people had been expecting,” said Raschkowan.

“And you have had some of the other global mining leaders coming out with their results over the past week and generally they have been pretty good, so I think people will just be looking for confirmation from Teck.”

Major gold companies will also report during the week, including Agnico-Eagle (TSX:AEM) on Wednesday and Barrick Gold Corp. (TSX:ABX) on Thursday.

Gold prices have hit a series of record highs during the quarter, the most recent on Oct. 14 when bullion hit US$1,377.40 an ounce, reflecting increasing demand from investors who want a hedge against inflation.

But Raschkowan noted that rising prices are only part of the story.

“While prices have done quite well, the gold stocks have been sort of laggards,” he said.

“It will be interesting to see what the consequence is in terms of rising costs, like how well they have been able to keep their costs under control and what the impact of currency (fluctuations) has been.”

It is expected Barrick earned 76 cents per share during the quarter, up from 54 cents a year ago, while analysts forecast Agnico Eagle will turn in EPS of 51 cents, 48 cents higher than a year ago.

Potash Corp. of Saskatchewan (TSX:POT), the target of a US$38.6-billion hostile takeover bid from resource giant BHP Billiton, releases its quarterly results on Thursday.

Investors are looking for earnings of $1.10 a share, up from 82 cents a year ago.

“It will be interesting to see the improvement that’s taking place in the fundamentals, in the price for potash, how that gets translated and whether the management comes out with other announcements in light of the takeover offer,” said Raschkowan.

On the economic front, investors will take in gross domestic product numbers for Canada and the U.S. on Friday.

There was some dismay a month ago when Statistics Canada reported that the economy actually shrank by 0.1% during July but economists are looking for GDP to show growth during August.

Paul Ferley, assistant chief economist at RBC Economics, observed that the latest reading on the trade deficit showed a huge improvement, which likely reflected growing strength in exports.

And wholesale trade numbers last week showed a one percentage point improvement during August.

“The strength in wholesale trade along with a good gain in manufacturing suggests August GDP up 0.3%, which more than reverses the drop we saw in July,” he said.

U.S. data is expected to reflect a slow economic recovery.

“We’re expecting an increase of 2% annualized, compared with a 1.7% increase in the second quarter,” said Ferley.

The data is likely to provide one more reason for the U.S. Federal Reserve to embark on another round of quantitative easing when it makes it next interest rate announcement on Nov. 3.