The Toronto stock market headed for a lower open as disappointing U.S. economic data pushed commodity prices lower and deepened worries that the U.S. economy could fall back into recession.
But the TSX should find some support from the financial sector after CIBC filed quarterly earnings that beat expectations.
The U.S. dollar moved higher against other currencies, pushing the Canadian dollar down 0.48 of a cent to 93.83 cents US.
U.S. futures worsened after the U.S. Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods rose 0.3 per cent last month, well below the 2.8 per cent gain that had been expected.
But the overall increase was driven by a 75.9 per cent increase in orders for commercial airplanes. Without the volatile transportation sector, orders dropped 3.8 per cent in the steepest decline since January.
The Dow Jones industrial futures lost 64 points to 9,959, the Nasdaq futures were down 15 points to 1,758.75 while the S&P 500 futures drifted 8.1 points lower to 1,041.7.
CIBC (TSX:CM) reported that net income rose to $640 million in the fiscal third quarter, up from $434 million a year ago, as revenue held steady and the bank took fewer provisions for credit losses.
Excluding one-time items, the bank’s earnings were equal to $1.66 per share, beating consensus analyst expectations of $1.53 per share, according to Thomson Reuters.
The financial sector had retreated on Tuesday after Bank of Montreal (TSX:BMO) reported a third-quarter profit of $669 million, up 20 per cent from a year ago but short of analyst expectations.
The TSX fell 161 points Tuesday as bank stocks lost ground, while the general market retreated in the wake of U.S. data that showed sales of previously occupied homes fell to a 15-year low in July.
Later in the morning, investors will take in more housing data. The U.S. Commerce Department is expected to report that sales of new homes were likely flat in July compared with a month earlier. June sales rebounded to an annual rate of 330,000, topping forecasts, after hitting a record low in May.
Meanwhile, oil prices lost ground, adding to a 13 per cent fall over three weeks. The October contract on the New York Mercantile Exchange lost 41 cents to US$71.22 after the American Petroleum Institute released figures late Tuesday that showed an unexpected draw of 1.85 million barrels in crude inventories last week. At the same time, gasoline supplies rose by 692,000 barrels.
Copper prices continued to weaken on demand concerns with the September copper contract on the Nymex down five cents to US$3.20 a pound.
Gold moved higher with the December contract in New York ahead $4.60 to US$1,238 an ounce.
In overseas trading, Tokyo’s Nikkei 225 stock average lost 1.7 per cent as the yen hit a 15-year high against the U.S. dollar and a nine-year peak against the euro.
The fear is that the country’s high-value exporters will find it increasingly difficult to compete in the international marketplace. Figures Wednesday showed that Japan’s exporters are already feeling the pinch — export growth slowed for the fifth consecutive month in July.
China’s benchmark Shanghai Composite Index fell two per cent while Hong Kong’s Hang Seng dropped 0.1 per cent.
London’s FTSE 100 index slipped 1.25 per cent, Frankfurt’s DAX was down 0.77 per cent while the Paris CAC 40 declined 1.45 per cent.
