TSX set for positive open amid lower commodities

U.S. futures were mainly higher amid news after the market close Tuesday that all but four of 19 major U.S. banks passed a Federal Reserve “stress test” exercise.

They also got the green light to boost dividends and take other steps that will make their stocks more attractive to investors also helped support markets.

One notable exception was Citigroup, the third-largest bank in the U.S. It was among the companies the Fed said lacked enough capital to withstand another severe economic and financial crisis and its stock was down four per cent in pre-market trading in New York.

The Dow Jones industrial futures were ahead 16 points to 13,125, the Nasdaq futures dipped 1.2 points to 2,692.8 while the S&P 500 futures edged up 0.7 of a point to 1,391.4.

Stock markets surged Tuesday as investors felt better about the pace of the U.S. economic recovery in the wake of a strong retail sales report for last month. Also, the U.S. Federal Reserve said that strains in global financial markets have eased, household and business spending have continued to advance and labour conditions have continued to improve.

Sentiment also got a big boost after J.P. Morgan Chase said it was raising its dividend by five cents to 30 cents a share and approved a US$15 billion stock repurchase program.

The good news sent the Dow industrials up 218 points to the highest level since Dec. 31, 2007, leaving the blue chip barometer up almost eight per cent year to date.

The TSX ran up 110 points Tuesday but the resource-heavy TSX has lagged New York’s performance. The main index is up almost five per cent but down about 1.6% from the highs of this year.

Oil prices declined after a report showed a jump in U.S. crude supplies, a sign demand remains sluggish. The April crude contract on the New York Mercantile Exchange dipped 25 cents to US$106.46 a barrel.

The American Petroleum Institute said late Tuesday that crude inventories rose 2.8 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Metal prices were lower with copper down four cents to US$3.86 a pound.

Improving sentiment about the U.S. economy punished gold prices as the April contract in New York tumbled $41.20 to US$1,653 an ounce.

On the earnings front, toy maker Mega Brands (TSX:MB) reported that profits were hurt in the fourth quarter as holiday sales came in lower, particularly in the United States. Net income declined to US$234,000 from $11.3 million a year earlier. On a per share basis, the results were equal to a loss of 14 cents per share versus a profit of 17 cents per share a year earlier.

Revenues fell three per cent in the quarter.

Broker and investment dealer GMP Capital Inc. (TSX:GMP) said net income dropped 95% in the fourth quarter to C$2.4 million as troubled market conditions affected its trading operations. Revenue declined 53% to $72.7 million.

European bourses were positive with London’s FTSE 100 index ahead 0.33%, Frankfurt’s DAX gained 1.09% and the Paris CAC climbed 0.66%.

Earlier in Asia, stocks outside of China were mostly higher. Japan’s Nikkei 225 index jumped 1.5% to its highest close since the end of July, 2011.

But Hong Kong and mainland Chinese shares lost ground, with property developers among the biggest decliners, after Premier Wen Jiabao said government curbs that have started to cool surging housing prices will remain in place.

Hong Kong’s Hang Seng Index slipped 0.2%, the benchmark Shanghai Composite Index tumbled 2.6% and the Shenzhen Composite Index plunged 4.1%.