TSX heads for higher open, commodities little changed ahead of economic data

TORONTO – The Toronto stock market appeared set for a positive start to the session Thursday as traders looked to key housing and manufacturing data coming out later in the morning.

The Canadian dollar was little changed, up 0.01 of a cent to a 3 1/2 month high of 101.12 cents US amid little movement in commodity prices and ahead of a report expected to show manufacturing shipments rose by 0.3 per cent during June, an improvement from the 0.4 per cent dip in May.

U.S. futures were positive with the Dow Jones industrial futures up 11 points to 13,146, the Nasdaq futures ahead 1.5 points to 2,740 and the S&P 500 futures advanced 1.8 points to 1,405.3.

Traders hope that the latest data on housing starts will reinforce the view that the U.S. housing sector continues to recover from the collapse of 2008. It is expected that data will show housing starts in July came in at a near four-year high of about 758,000 annualized.

Other data is expected to show a measure of manufacturing in the Philadelphia region contracted at a slower pace this month.

The Federal Reserve Bank of Philadelphia’s index is reckoned to have improved to minus five in August from minus 12.9 in July. Figures less than zero indicate contraction.

Economists also believe that the number of Americans filing claims for jobless insurance rose slightly last week to 365,000 from 361,000.

Analysts also note trading is likely to feature low volumes in the traditional summer lull that grips trading desks. Investors are also cautious in the run-up to policy statements from the world’s leading central banks.

Markets have rallied since the lows of the year in early June on optimism the world’s central banks will do more to shore up the global economy.

While the European Central Bank is expected to restart its bond-buying program to keep a lid on the borrowing rates of Spain and Italy, the U.S. and Chinese monetary authorities are widely tipped to back more easing measures to boost their economies.

Chinese Premier Wen Jiabao, during a visit to eastern China earlier this week, was quoted by the official Xinhua News Agency as saying the country has the “conditions and capabilities” to meet its 7.5 per cent economic growth target this year.

Oil prices were little changed after running up almost US$1 Wednesday in the wake of data showing a much bigger than expected drawdown of American crude inventories last week. On Thursday, the September contract on the New York Mercantile Exchange edged up four cents to US$94.37 a barrel.

Copper prices were unchanged at US$3.35 a pound while December bullion dipped 40 cents to US$1,606.20 an ounce.

In corporate news, Barrick Gold Inc. (TSX:ABX) will be in focus as the world’s biggest gold miner said it is holding talks that could result in the sale of its majority stake in spinoff African Barrick Gold to China’s largest gold producer. ABG is Tanzania’s largest gold producer and one of the five largest gold producers in Africa, but production costs have been higher than anticipated, Barrick Gold said in its recent second-quarter financial report.

Earnings news was uneven.

Tech bellwether Cisco Systems said after the close Wednesday that it was raising its dividend by 75 per cent to 14 cents a share as the company beat analyst expectations on quarterly earnings and revenue. Its shares surged almost seven per cent in pre-open trading in New York.

Wal-Mart Stores Inc.’s second-quarter net income rose 5.7 per cent and the retailer raised its full-year profit outlook. But quarterly revenue came in short of expectations and its stock was down 2.8 per cent in pre-open trading.

Elsewhere on the retailing front, Reitmans (Canada) Ltd. (TSX:RET) said Wednesday that its sales for August have been hurt by problems with a new warehouse management system at its distribution centre. It said it believes the situation has been fixed, but the disruptions in the shipping and receiving of merchandise to stores would hurt sales and margins for the third quarter.

Earlier in Asia, stocks in Japan posted solid gains, with the Nikkei 225 index up 1.9 per cent to its highest finish in six weeks. Hong Kong’s Hang Seng closed lower after shedding morning gains, ending 0.5 per cent lower and South Korea’s Kospi was slightly up.

In mainland China, the Shanghai Composite Index lost 0.3 per cent while the smaller Shenzhen Composite Index lost 0.8 per cent.

European bourses were mixed as London’s FTSE 100 index slipped 0.18 per cent, Frankfurt’s DAX inched up 0.03 per cent and the Paris CAC 40 declined 0.13 per cent.