TSX heads for lower open amid glum China data, Greece euro exit concerns

TORONTO – The Toronto stock market looked set to give back some of last week’s solid advance amid worry centred around whether Greece will exit the eurozone and subpar economic data from China.

The Canadian dollar rose 0.16 of a cent to 80.01 cents US amid rising prices for oil and metals.

New York futures were well in the red with the Dow Jones industrial futures down 72 points to 17,710, the Nasdaq futures were 14.7 points lower to 4,212.8 and the S&P 500 futures shed 9.1 points to 2,044.

Chinese trade data for January elevated worries about a deepening economic slowdown in the world’s second-biggest economy. Imports tumbled 19.7 per cent from a year earlier on top of a decline of 2.4 per cent a month earlier. Exports dropped 3.2 per cent year-on-year, compared with a 9.7 rise in December.

However, analysts pointed out that China’s trade figures early in the year are often volatile because companies rush to fill orders before shutting down for the Lunar New Year, which falls in January or February.

Chinese demand for commodities has cooled as economic growth slowed amid March copper in New York slipped a penny to US$2.58 a pound.

Meanwhile, Greece’s new radical left government appeared set on a collision course with the country’s creditors. Prime Minister Alexis Tsipras is demanding a “bridge agreement” that would give Greece and its creditors time to negotiate a new debt deal much more favourable to the country by June.

The current bailout deal betweem Greece and its creditors runs until the end of February, but Tsipras said the government is “not entitled to ask for an extension,” saying the bailout deals that have kept the country afloat “have been abolished by popular mandate.”

Meanwhile, the TSX energy sector is set to build on last week’s 12 per cent runup as March crude gained 71 cents to US$52.40 a barrel. Oil prices have essentially stopped going straight down and have entered a period of volatility as traders try to find a bottom to plunging prices.

Elsewhere on commodity markets, April gold gained $4.10 to US$1,238.70 an ounce.

This is also a major week for Canadian corporate earnings.

Among other things, investors will assess how badly depressed commodity prices have impacted bottom lines of resource companies.

It has been a challenging time for Canadian resource companies as prices for metals and oil have been hammered in recent months.

For example, copper prices tumbled 13 per cent during January alone while oil prices have collapsed, falling 40 per cent since the end of November as OPEC countries refused to back off on production in order to support prices weakened by a glut of global supply.

Energy companies reporting this week include Talisman Energy (TSX:TLM), Husky Energy (TSX:HSE) and oilfield support company Precision Drilling (TSX:PD).

There was also merger and acquisition activity in the resource sector.

Tahoe Resources Inc. (TSX:THO) and Rio Alto Mining (TSX:RIO) are planning to merge their businesses to create a mid-sized silver and gold producer. Tahoe’s offer values Rio Alto at about $1.3 billion, based on Friday stock prices for the two companies.