CD: TSX heads for positive open, traders relieved by high demand for Spanish debt
TORONTO - The Toronto stock market headed for a positive open as traders were encouraged by a successful bond auction by Spain that raised 2.54 billion euros.
The Canadian dollar was little changed as oil prices advanced while copper prices dipped, off 0.04 of a cent to 100.84 cents US.
The yield on the 10-year bonds auctioned at Thursdays auction was 5.7 per cent, up from 5.3 per cent at the last auction on April 4. But traders were encouraged by the fact that demand was more than double the amount sold, which suggests that Spain will continue to be able to easily tap financial markets to fund itself. That is crucial for the rest of Europe, as Spain would likely be too big to bail out.
Worries about Spain have in recent weeks seen a flare-up in Europes debt crisis. But analysts suggest those concerns about the heavily indebted country will continue to weight on market sentiment.
"With the full effects of rising unemployment, falling house prices and fiscal consolidation still to be felt, concerns about Spain will not go away anytime soon," said a commentary from Barclays Research.
"We are also pessimistic about Italy's chances of meeting its revised deficit target and believe more austerity is likely to have a negative effect on domestic demand."
U.S. futures were positive in the wake of positive earnings reports from banking giants Morgan Stanley and Bank of America along with eBay.
The Dow Jones industrial futures gained 28 points to 12,985, the Nasdaq futures were up 9.5 points to 2,704 and the S&P 500 futures were ahead 2.5 points to 1,380.8.
Bank of America earned three cents per share in the first three months of the year, but that includes an accounting charge of 28 cents because the value of the banks debt rose. Wall Street analysts were expecting earnings of nine cents but investors appear to like the results and the stock was up 4.5 per cent in premarket trading.
Morgan Stanley reported a first-quarter loss on a big accounting charge, but without the charge its earnings beat analysts forecasts and its shares were up 5.5 per cent in premarket trading.
EBays shares jumped 11.1 per cent ahead of the open as its first-quarter net income grew 20 per cent thanks to higher revenue from its PayPal business and brisk sales at its e-commerce websites. Adjusted earnings of 55 cents per share beat estimates by three cents.
However, Nokia Corp. shares dipped 1.1 per cent in premarket trading as tougher-than-expected competition pushed it to a net loss of 929 million in the first quarter as sales plummeted, including for smartphones.
Oil prices advanced after falling sharply Wednesday in the wake of data showing a much bigger than expected rise in U.S. crude inventories last week, suggesting flagging demand. The May crude contract on the New York Mercantile Exchange gained 13 cents to US$102.80 a barrel.
Copper prices headed lower for a second day, down a penny to US$3.62 a pound.
A slowing Chinese economy has helped push the price of the metal down almost eight per cent this month. China is the world's biggest consumer of the metal, viewed as an economic bellwether as it is used in a wide variety of industries.
Bullion prices dipped $4.60 to US$1,635 an ounce.
European bourses were mixed as London's FTSE 100 index rose 0.3 per cent while Frankfurt's DAX lost 0.53 per cent and the Paris CAC 40 slipped 0.58 per cent.
In Asia, Japans Nikkei 225 stock average fell 0.8 per cent after the Finance Ministry said the trade deficit for the year was 4.41 trillion yen (US$54 billion). With all but one of Japans 54 nuclear power reactors offline in the aftermath of last years nuclear disaster, the country has been forced to rely on imported oil and gas to generate electricity.
South Koreas Kospi fell 0.2 per cent and Hong Kongs Hang Seng rose one per cent.
Mainland Chinas benchmark Shanghai Composite Index lost 0.9 per cent.
In other corporate news, pulp producer Fibrek (TSX:FBK) has suffered a setback in its bid to thwart a hostile takeover after the Supreme Court of Canada refused Wednesday to hear an appeal of a ruling disallowing a key defensive move. At issue was Fibreks decision to issue special warrants to its ally, Mercer International Inc. (TSX:MRI.U), in order to thwart Resolute Forest Products (TSX:ABH). The warrants would have increased the total number of Fibrek shares outstanding and make it more expensive for Resolute to win a two-thirds majority stake in Fibrek.
