The Toronto stock market headed for a lower start to the session Wednesday amid soft commodity prices.
Traders awaited a second day of testimony before Congress by U.S. Federal Reserve chairman Ben Bernanke and the release of the central bank’s so-called Beige Book, its regional study of economic conditions.
The Canadian dollar was down 0.11 of a cent to 98.65 cents US ahead of the release of the Bank of Canada’s Monetary Policy Report and a news conference by bank governor Mark Carney. The bank on Tuesday opted to leave interest rates unchanged at 1% while again indicating that rates will rise in the future.
U.S. futures were lower after markets advanced Tuesday on the strength of strong corporate earnings from the likes of Goldman Sachs and Coca-Cola and also a reassurance from Bernanke that the Fed is prepared to take further action to support a slowing economy—but he didn’t spell out how or when.
The Dow Jones industrial futures slipped 32 points to 12,705, the Nasdaq futures were down 6.8 points to 2,580.2 and the S&P 500 futures fell 4.3 points to 1,354.2.
Bernanke also warned that the country could be headed for another recession if Congress doesn’t avert a looming budget crisis.
That gloomy outlook helped push commodity prices lower Wednesday and the August crude contract on the New York Mercantile Exchange lost 26 cents to US$88.96 a barrel.
Copper prices dipped a penny to US$3.45 a pound while gold faded $10.60 to US$1,578.90 an ounce.
On the earnings front, fertilizer company Agrium Inc. says that it is expecting record earnings for the second quarter. The Calgary-based firm says earnings will be in the range of $5.40 to $5.50 diluted earnings per share while first half earnings will come in at a range of $6.72 to $6.82 per share. Agrium says the revised estimates are about 15% higher than previously announced.
Shares in Intel Corp., the world’s largest chipmaker, were set to fall at the open after it says Tuesday after the close that the weak global economy is slowing its growth, and revenue for the current quarter is likely to come in below forecasts.
Intel’s second-quarter net income was US$2.83 billion, or 54 cents per share, down 4.3% from a year earlier, as operating expenses rose faster than revenue. Net income beat forecasts by two cents but its shares dropped about 1% in pre-open trading.
There was further good news from the American financial sector Wednesday.
Bank of America swung to a profit of US$2.1 billion or 19 cents a share in the second quarter, much better than a year ago when the bank reported it lost $9.1 billion when it paid $8.5 billion to settle claims from investors who had bought its mortgages or mortgage-backed bonds.
The investors said they’d been misled about the mortgages’ quality. Earnings beat analyst estimates of 16 cents a share and the stock was up 1.4% in premarket trading.
In other earnings news, Swedish wireless equipment maker LM Ericsson reported second-quarter net profit of 1.1 billion kronor, down sharply from the 3.1 billion kronor in the same period a year ago. Ericsson mainly blamed the drop on a shift in its sales pattern as its Networks unit contributed significantly less to its total sales number, while the Global Services unit had higher sales. The net effect of the shift was to pressure the company’s margins.
European bourses were positive with London’s FTSE 100 index up 0.1%, Frankfurt’s DAX gained 0.15% and the Paris CAC 40 ran up 0.74%.
Earlier in Asia, Hong Kong’s Hang Seng fell 1.1%, South Korea’s Kospi dropped 1.5%, Japan’s Nikkei 225 shed 0.3% while China’s Shanghai Composite Index gained 0.4%.
Elsewhere in corporate news, The Holloway Lodging investment trust says it’s not going to accept any of the three strategic deals offered to it over recent months.
The Halifax-based hotel operator says its board has determined that none of the offers is satisfactory. It says, however, it would be open to a strategic deal that maximizes Holloway’s value for its unit holders.