TSX heads for weak open Tuesday

U.S. futures were generally weak with the Dow Jones industrial futures up five points to 12,855.

The Nasdaq futures rose 5.5 points to 2,374 while the S&P 500 futures slipped 0.2 of a point to points to 1,374.7.

North American markets finished in the red Monday as traders reacted to Friday’s release of U.S. jobs data showing the United States created only 120,000 jobs last month, far less than the approximately 200,000 that economists expected. The disappointing showing followed three straight months where the American economy cranked out at least 200,000 jobs.

Slower growth in China was also in focus Tuesday after the world’s second-biggest economy returned to a trade surplus in March but growth in exports and imports was weak.

Exports rose 8.9% over a year earlier to US$165.6 billion, while imports grew 5.3% to $160.3 billion, well below China’s growth levels in recent years.

Double-digit economic growth in China has been key to lifting the global economy from the sharp economic slowdown that followed the 2008 financial crisis. And strong demand for commodities has lifted prices for oil and metals and energy and mining stocks on the resource-heavy TSX.

But Chinese demand has weakened following government controls imposed to cool inflation and steer growth to a more sustainable level.

The latest reading on Chinese economic growth comes out on Friday.

China’s flagging demand is a bad sign for Canadian, Australian, Brazilian and Asian economies that count on Chinese customers to buy oil, copper, iron ore and industrial components.

Economic worries have driven the TSX lower for the past five weeks, leaving the main index up less than 100 points so far this year.

Oil prices fell below $102 a barrel Tuesday as weaker economic growth raised the prospect that crude demand will remain tepid.

The May crude contract on the New York Mercantile Exchange lost 55 cents to US$101.91 a barrel.

Copper prices advanced after falling five per cent over the past week. The May contract on the Nymex rose two cents to US$3.74 a pound for the metal widely viewed as an economic barometer as copper is used in so many industries.

Bullion also moved higher while the June contract rose $3.70 to US$1,647.60 an ounce.

Traders also looked forward to the start of the first quarter corporate earnings season with some trepidation.

After a series of gains, hopes for a strong quarter have been dimmed amid lower estimates and guarded forecasts.

Alcoa Inc. kicks off earnings after the close and the aluminum manufacturer is expected to post a loss of three cents per share. In the year-earlier quarter, Alcoa reported a profit of US$308 million, or 27 cents per share.

Alcoa’s report should provide insight into how the aluminum industry is coping with a glut of supply, weaker prices and higher costs.

The European debt crisis also hovered in the background as Spain’s bond yields on international markets rose despite expectations of a new round of austerity measures.

The yield on 10-year Spanish bonds in the secondary market rose to 5.81% from 5.74% late last week. The difference between Spain’s yield and that of the benchmark German bund was 4.11 percentage points, the highest since the new government took power in December.

European indexes were lower as traders got their first opportunity to react to the American jobs data after the long Easter weekend.

London’s FTSE 100 index lost 0.92%, Frankfurt’s DAX was down 1.02% and the Paris CAC 40 fell 1.53%.

Asian markets were mixed as Tokyo’s Nikkei 225 index slipped 0.1% and Hong Kong’s Hang Seng fell 1.1%. China’s benchmark Shanghai Composite Index rose 0.9% and South Korea’s Kospi shed 0.1%.

In corporate news, Sony Corp. more than doubled its projected annual loss to 520 billion yen (US$6.4 billion), its worst red ink ever, due to a massive tax charge. The additional 300 billion yen non-cash charge stemmed from revaluing U.S. tax assets that are unlikely to be utilized due to its string of annual losses.

In February, it had projected an annual net loss of 220 billion yen amid weak TV sales, the strong yen and production disruptions from flooding in Thailand.