Toronto stock market to open little changed
TORONTO - The Toronto stock market looked set to open little changed Friday as gold prices advanced amid a deterioration in the Russian/Ukraine crisis while traders looked to a key speech from Federal Reserve chairwoman Janet Yellen later in the morning.
However, the market could find support from the financial sector after Royal Bank (TSX:RY) delivered better than expected results and a dividend increase.
Canada's largest bank said third-quarter profit amounted to $1.59 per share under standard accounting and $1.64 per share on an adjusted basis.
Analysts had generally estimated Royal would have $1.54 per share of net income and $1.56 per share on an adjusted basis.
Royal Bank is hiking its dividend by four cents to 75 cents a common share.
The Canadian dollar was down 0.05 of a cent to 91.32 cents US ahead of the release of inflation data for July and retail sales figures for June.
U.S. futures were mixed as the Dow Jones industrial futures declined three points to 17,013, the Nasdaq futures gained two points to 4,049.5 while the S&P 500 futures slipped one points to 1,988.5.
The Fed's Janet Yellen is expected to focus on the labour market in her speech at the central bank's annual economic symposium in Jackson Hole, Wyo. The health of the labour market is critical for when the Fed decides to hike interest rates, which have been held near zero since the financial crisis.
While U.S. job creation has steadily improved and averages about 200,000 jobs a month, there are worries about increased slack. The participation rate in the U.S. has fallen to a percentage in the low 60s. Also of concern is the number of workers employed part-time for economic reasons, and the high level of long-term unemployment.
The Fed has been generally expected to raise rates mid-2015 but there are concerns the Fed may move even earlier.
Rising rates are seen as a drag for the stock markets since some investors would choose to invest their money in securities with a guaranteed return, like bonds.
Meanwhile, geopolitical concerns were on the boil after Ukraine accused Russia of a "direct invasion" which "happened for the first time under the cover of the Red Cross."
That charge from Ukrainian Security Service chief Valentyn Nalyvaichenko came after Russia sent dozens of aid trucks into rebel-held eastern Ukraine on Friday without Kiev’s approval.
The aid is intended for civilians in the city of Luhansk, where pro-Russian separatists are besieged by government forces.
But in the past few days, Ukraine says its troops have recaptured significant parts of the city and suspicions are running high that Moscow’s humanitarian operation may instead be aimed at halting Kiev’s military momentum.
Traders sought safety in gold and U.S. Treasurys. The December bullion contract in New York gained $3.60 to US$1,279 an ounce.
The yield on the benchmark U.S. Treasury was 2.396 per cent, down 0.11 of a point from Thursday.
Elsewhere on the commodity markets, October crude was down 34 cents to US$93.62 a barrel while September copper rose two cents to US$3.20 a pound.