THE CANADIAN PRESS
The Toronto stock market could be off to a negative start as energy sector heavyweight EnCana Corp. delivered sharply lower earnings and oil prices declined.
The S&P/TSX composite index slid 83 points on Wednesday, its second lower close in a row. But prior to those losses, the market had surged about 800 points over six sessions as investors were impressed with a string of U.S. earnings that beat expectations and raised hopes for an improving economy.
EnCana reported that second-quarter net earnings fell 80 per cent to $239 million or 32 cents a share, reflecting a sharp drop in oil and gas prices from a year ago. Calgary-based EnCana said that cash flow fell 25 per cent from a year ago to $2.15 billion.
Natural gas prices during the second quarter averaged $3.80 per million British thermal units, down 67 per cent from year ago levels while oil prices are also down sharply from levels during the second quarter last year of around US$140 a barrel.
On Thursday, the September crude contract on the New York Mercantile Exchange fell 36 cents to US$65.04 a barrel. The Canadian dollar was up 0.09 of a cent to 91.12 cents US.
U.S. futures headed higher following strong earnings reports from industrial giant 3M Co. and Ford Motor Co. with the Dow Jones industrial futures up 39 points to 8,872, the S&P 500 futures moved ahead 5.7 points to 955.1 and the Nasdaq futures rose 7.5 points to 1,564.
Ford surprised the market with a second-quarter profit of US$2.3 billion due mainly to a huge gain for debt reduction.
Without special items, Ford would have lost US$424 million, or 21 cents per share. Analysts surveyed by Thomson Reuters expected a per share loss of 50 cents.
3M Co., which makes products including Scotch tape, asthma inhalers and film used in LCD televisions, says its second-quarter profit fell 17 per cent as the global recession cut sales of consumer electronics and products for car makers.
But the results beat expectations and the Dow component also raised its full-year sales and earnings forecasts.
Investors have been hesitant to make big moves the past two days amid a mixed batch of earnings reports. Many companies continue to report profits that are better than expected, and some are even giving improved outlooks on the remainder of the year.
But the bar had been set so low to begin with, and analysts warn that as earnings season progresses, the expectations tend to increase. Meanwhile, sales at many companies are still sagging, a clear sign that consumers and businesses would rather save than spend.
The August bullion contract on the Nymex inched up 20 cents to US$953.50 while September copper in New York dipped two cents to US$2.50 a pound.
Overseas, Hong Kong's Hang Seng index surged three per cent. The Hang Seng now stands at its highest level since September 10, outpacing the recovery in U.S. markets.
Japan's Nikkei stock average rose 0.7 per cent.
London's FTSE 100 index dipped 0.15 per cent, Frankfurt's DAX was flat and the Paris CAC 40 was off 0.08 per cent.
