NS: TSX to open little changed amid solid bank earnings, hopes for fiscal cliff pact
TORONTO - The Toronto stock market appeared heading for a flat open Thursday amid strong earnings reports from three of the big Canadian banks along with hopes that American lawmakers are getting closer to an agreement that would avert a fiscal crisis at the end of the year.
TD Bank's (TSX:TD) quarterly profit amounted to $1.66 per share before adjustments, down two cents per share from the same time last year. On an adjusted basis, TD had $1.83 per share of diluted earnings, up from $1.75 per share a year earlier and two cents a share above a consensus estimate.
TD also announced it is buying the U.S.-based Epoch investment management business for US$668 million in cash.
CIBC (TSX:CM) had $852 million or $2.02 of net income in the fourth quarter, an increase of nearly $100 million from the same time last year. On an adjusted basis, CIBC’s fourth-quarter profit amounted to $2.04 per share, six cents above estimates.
And National Bank’s (TSX:NA) quarterly earnings ran ahead 20 per cent from a year ago to $351 million or $1.97 per share. Ex-items, the bank earned $1.93 a share, which matched expectations.
National is also upping its dividend by five per cent to 83 cents a share.
The Canadian dollar inched up 0.02 of a cent to 100.86 cents US.
U.S. futures were weak with the Dow Jones industrial futures off four points to 13,020, the Nasdaq futures were down three points to 2,634.5 while the S&P 500 futures slipped 0.9 of a point to 1,407.4.
Stocks finished higher Wednesday amid reports a substantial number of Republicans had signed a letter calling for exploration of "all options" on taxes and entitlement programs, a signal that some rank-and-file members could be ready to bargain.
President Barack Obama and House of Representatives Speaker John Boehner spoke Wednesday for the first time in days in a telephone discussion on the so-called “fiscal cliff.” That’s the name for the automatic spending cuts and tax increases that would kick in at the start of next year if no budget deal is reached.
Economists think the subsequent sharp drop in economic activity would send the U.S. back into recession.
Obama said a compromise was "not that tough" and could even be done quickly, raising the possibility that broader negotiations will soon resume between the White House and congressional leaders.
But Treasury Secretary Tim Geithner warned Wednesday after the close that the administration will "absolutely" let the double whammy take effect as scheduled unless Republicans give in to Obama’s demand to raise tax rates at upper income levels.
Commodities were mainly lower as the January crude contract on the New York Mercantile Exchange extended losses from Wednesday that resulted from data showing a sharp run-up in U.S. gasoline inventories last week. Crude lost 20 cents to US$87.68 a barrel.
The March copper contract shed two cents to US$3.67 a pound after rising three cents Wednesday amid rising hopes for more economic stimulus in China, the world's biggest consumer of the metal.
February gold bullion gained 20 cents to US$1,694 an ounce.
In other corporate news, grocer Loblaw Companies Ltd. (TSX: L) says it wants to unlock shareholder value by creating create one of the largest real estate investment trusts in Canada. It plans to contribute a significant portion of its real estate assets to a planned REIT, which is expected to be sold in an initial public offering expected to be completed in mid-2013. Those assets have a current market value of more than $7 billion.
Bombardier Inc.’s (TSX:BBD.B) aerospace division said American carrier Delta Air Lines has placed a firm order for 40 of its CRJ900 NextGen regional jets. Delta has also taken options on an additional 30 planes.
Montreal-based Bombardier said that, based on the list price, the firm order is valued at approximately US$1.85 billion and could reach approximately $3.29 billion if the 30 options are exercised.
And Rona Inc. (TSX:RON) said it is planning to sell non-core assets to focus the business and improve profitability. Rona is Canada’s largest home-improvement retailer.
Earlier in Asia, shares in China were flat after big gains in the previous session when investors were cheered by hopes of more stimulus measures. The main Shanghai index ended 0.1 per cent lower while Hong Kong’s Hang Seng fell 0.1 per cent.
However, Japan’s Nikkei 225 index rose 0.8 per cent to its first closing above 9,500 since April.
European bourses were positive as London's FTSE 100 index gained 0.33 per cent, Frankfurt's DAX climbed 0.97 per cent and the Paris CAC 40 rose 0.21 per cent.
