TORONTO – The Toronto stock market looked ready to move lower on Wednesday as U.S. housing starts data fell short of expectations and traders remain focused on discussions over the looming “fiscal cliff” deadline.
The Canadian dollar was down 0.11 of a cent to 101.34 cents US.
The U.S. Commerce Department said that builders broke ground on fewer houses in November likely in part due to Superstorm Sandy in the Northeast. The report says builders began construction of homes at a seasonally adjusted annual rate of 861,000. That’s three per cent lower than October’s annual rate of 888,000, which was the fastest since July 2008.
“Keep in mind that growth in housing starts was extremely strong in the prior three months, so some giveback is not a concern at this point, especially given what permits did in November,” BMO Capital Markets economist Robert Kavcic writes in a note.
The potential budget deal in the U.S. has grabbed the focus of traders in recent sessions, and while a compromise hasn’t been reached between the White House and Congress, sentiment has improved.
Markets appear to be confident that President Barack Obama and Republican leaders agree a deal to avoid the so-called “fiscal cliff,” a series of automatic tax hikes and government spending cuts that will start coming into effect at the start of next year and have the potential of derailing the U.S economic recovery.
Wall Street was poised for a steady opening, with both Dow futures and the broader S&P 500 futures up 0.3 per cent. Nasdaq futures are flat.
Meanwhile, Canadian bank CIBC is forecasting “very mediocre” domestic growth next year, blaming weakness in the world economy and an absence of key economic drivers at home. CIBC says it now expects economic growth of only 1.7 per cent in 2013, down from its previous estimate of two per cent.
In commodities, oil prices gained traction as the January crude contract on the New York Mercantile Exchange rose 47 cents to close at US$88.40 a barrel.
March copper declined about half a cent to US$3.66 a pound while February gold bullion moved down 80 cents to US$1,669.90 an ounce.
In Europe, the FTSE 100 index of leading British shares was up 0.6 per cent at 5,972 while Germany’s DAX rose 0.3 per cent at 7,676. The CAC-40 in France was 0.5 per cent higher at 3,667.
Earlier in Asia, stocks did well too, with Hong Kong’s Hang Seng index up 0.6 per cent to 22,623.37 and Shanghai’s main index of Chinese shares closing flat at 2,264.30.
Japan’s Nikkei 225 index was the start turn, surging 2.4 per cent to close at 10,160.40, the first time the benchmark has closed above 10,000 since April 3.
The stock market advance came three days after a landslide election victory by the Liberal Democratic Party. Former Prime Minister Shinzo Abe, head of the LDP, has pledged to keep the yen from strengthening and take measure to boost the deflation-mired economy.