BR: TSX heads for higher open, Saudi king's death raises oil production questions
TORONTO - The Toronto stock market headed for a slightly higher open Friday amid a positive earnings report from bellwether General Electric Co. and questions about whether the death of Saudi Arabia's King Abdullah could mean a change in his country's oil output.
The Canadian dollar continued to lose ground, down 0.2 of a cent to 80.42 cents US. The currency has tumbled about 3 1/2 U.S. cents this week after the Bank of Canada surprised markets with a quarter-point rate cut that took its key overnight rate down to 0.75 per cent.
U.S. futures were positive with the Dow Jones industrial futures up 35 points to 17,772, the Nasdaq futures climbed 6.7 points and the S&P 500 futures rose 3.4 points to 2,059.8.
Oil prices rose earlier in the morning on news of the death of Saudi Arabia's powerful monarch but later the March contract turned 21 cents lower to US$46.10 a barrel.
Crude prices have plunged 40 per cent since the end of November when Saudi Arabia said seek to maintain market share by refusing to cut production in order to support prices. Overall, prices are down about 55 per cent from last June because of global oversupply.
The question now is whether Abdullah's successor Prince Salman — himself in poor health — will change the kingdom's oil policy.
Meanwhile, the spinoff effects of plunging oil on smaller producers continued as Penn West Petroleum Ltd. (TSX:PWT) CEO David Roberts said the company is in talks with bondholders as the collapse of oil prices threatens its ability to meet conditions on its debt.
A rising U.S. dollar helped push other commodities lower as February bullion declined $3.60 to US$1,297.10 an ounce while March copper shed six cents to US$2.52 a pound.
Meanwhile, General Electric Co. reported fourth-quarter net income of US$5.15 billion or 51 cents a share. Earnings, adjusted for non-recurring costs and to account for discontinued operations, were 56 cents per share, a penny ahead of expectations. But the industrial conglomerate posted revenue of $42 billion, missing forecasts of $42.4 billion and its stock declined 0.3 per cent.
McDonald's Corp. shares were up 1.7 per cent in pre-market trading after the world's biggest hamburger chain posted fourth-quarter net income of $1.1 billion or $1.13 a share.
Earnings, adjusted for non-recurring costs, were $1.22 per share, topping estimates by two cents. Revenue came in at $6.57 billion in the period, missing forecasts of $6.73 billion.
Meanwhile, conciliation between Canadian National Railway (TSX:CNR) and the union representing its 1,800 engineers is set to expire at midnight Saturday night after the Teamsters said that the railway rejected its request for a 60-day extension. As a result, CN could be headed to a strike or lockout as of mid-February following a 21-day cooling off period.
