TORONTO – The Toronto stock market looked set for a higher open as commodity prices gained ground and traders looked ahead to another dose of economic stimulus from the U.S. Federal Reserve.
The Canadian dollar rose 0.03 of a cent to 101.43 cents US.
U.S. futures also advanced amid hopes for a resolution to the so-called fiscal cliff, an end-of-year deadline when automatic steep spending cuts and significant tax increases are set to take place. With economic growth already weak, the worry is that the two moves would slash growth further and send the U.S. back into recession, sending shockwaves around the world.
The Dow Jones industrial futures gained 24 points to 13,302, the Nasdaq futures were up 7.8 points to 2,693.5 while the S&P 500 futures rose 3.7 points to 1,435.2.
The Fed is widely expected to announce a new bond-buying program to replace one that’s about to expire at the end of its two-day policy meeting later Wednesday.
The central bank has launched three rounds of quantitative easing since the financial crisis hit in 2008 and they have been widely credited with strengthening financial markets.
On the economic front, there was another indication that the recession in the eurozone is worsening.
Eurostat, the EU’s statistics office, said industrial production fell by a monthly 1.4 per cent in October, in contrast to expectations of a modest 0.2 per cent increase.
Germany, Europe’s biggest economy, fared particularly badly, with its industrial sector posting a 2.4 per cent monthly decline in output. Germany has seen its industrial sector shrink for three straight quarters.
The eurozone fell back into a mild recession in the third quarter.
Crude prices were higher as OPEC oil ministers signalled they will stick to current daily output targets of 30 million barrels at their meeting Wednesday.
The January crude contract on the New York Mercantile Exchange was up 63 cents to US$86.42 a barrel.
Copper prices also improved with the March contract on the Nymex ahead two cents to US$3.71 a pound.
February gold bullion gained $6.90 to US$1,716.50 an ounce.
European bourses were higher despite the industrial production report as London’s FTSE 100 index rose 0.26 per cent, Frankfurt’s DAX gained 0.4 per cent and the Paris CAC 40 added 0.02 per cent.
Earlier in Asia, stocks posted gains in spite of North Korea’s successful launch of a long-range rocket early in the day. The action is believed to have been a test of technology seen as crucial to advancing North Korea’s nuclear weapons ambitions.
Japan’s Nikkei 225 index rose 0.6 per cent to its highest close since late April. Advances on the Nikkei were largely attributed to the yen’s recent weakness against the U.S. dollar and the euro. Hong Kong’s Hang Seng added 0.8 per cent while South Korea’s Kospi gained 0.6 per cent.
In corporate news, BCE Inc. subsidiary Bell Canada (TSX:BCE) says it plans to make a $750-million payment toward its defined benefit pension plan to help improve its funded status. The pension plan’s financing costs will benefit from the stronger position of the plan and therefore will help increase earnings by two cents per share starting next year.
Avon Products said it will cut about 1,500 jobs and exit the South Korean and Vietnamese markets as the struggling beauty products seller takes some initial steps toward its cost-cutting goal.
The New York-based direct beauty products seller said that it plans to focus on high priority markets as part of a push to save US$400 million by 2015.