At the open: TSX, Dow flat as metal prices slip

Canada’s main stock index oepned flat on Thursday as gold and copper prices fell ahead of the release of key economic data from China.

The S&P TSX index was up 8.64 points, or 0.06 per cent, to 13,679.99.

It notched its highest close since November on Wednesday as financial and industrial shares rallied on surprisingly upbeat China trade data and unexpectedly strong earnings from Wall Street bank JP Morgan Chase & Co.

Zinc and copper prices dipped on Thursday after strong gains during the two previous sessions as some investors locked in profits ahead of key Chinese economic data.

Weaker oil prices and a firmer dollar also weighed on metals markets.

The London Metal Exchange index of six industrial metals rallied nearly 4 percent over the past two days, bolstered by higher oil prices, hopes of tightening supply and signs of stronger demand in top metals consumer China.

“It looks like profit taking ahead of the Chinese data tomorrow morning since a lot of the good news from tomorrow is already priced in,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.

“Coupled with a somewhat weaker oil price and a firmer dollar, this might be a good reason to take profits or to sell.”

Chinese data for first quarter GDP and industrial output for March are due on Friday and many investors are hopeful after strong trade numbers on Wednesday.

U.S. stocks were little changed higher on Thursday as investors assessed quarterly earnings from big banks.

The Dow Jones industrial average was up 18.63 points, or 0.1 per cent, at 17,926.91, the S&P 500 was up 0.94 points, or 0.05 per cent, at 2,083.36 and the Nasdaq composite was down 0.42 points, or 0.01 per cent, at 4,947.00.

Bank of America was flat in early trading and Wells Fargo fell nearly 1 per cent early after the banks posted lower quarterly earnings.

The results come a day after JPMorgan beat lowered expectations for first-quarter profit and revenue.

“We’re looking at a flattish kind of market that is looking to grasp a positive theme and the banks haven’t delivered this morning,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

The S&P financial sector is down nearly 4 per cent for the year – the worst performer among the 10 major S&P sectors – weighed down by the uncertainty surrounding U.S. interest rates and potential defaults in the energy sector.

Expectations for corporate earnings are weak, with S&P 500 companies on average expected to post a 7.8-per-cent decline in first-quarter profit, according to Thomson Reuters data.

Oil rose slightly on Thursday after the International Energy Agency (IEA) trimmed its forecast for demand growth but said a fall in oil output in the United States was speeding up.

Oil rose after data showed consumer prices rising less than expected, pushing the dollar lower. A weaker dollar supports oil, making it more affordable to holders of other currencies.

Brent crude futures were up 15 cents from their last close at $44.33 a barrel. U.S. crude was up 13 cents at $41.89 a barrel.

The IEA trimmed its estimate for 2016 global demand growth from last month to 1.16 million barrels per day, but said a much-anticipated slide in production of light, tight oil in the United States was gathering pace.

The market was choppy ahead of a keenly anticipated producers’ meeting on Sunday in Doha of the world’s biggest oil exporters, including Saudi Arabia and Russia.

They are set to finalize a deal reached in February to freeze oil output at January levels, aiming to bolster oil prices. But many analysts think there is scope for disappointment after the meeting.

“There is hope going into the talks that supply will be frozen, and there will be lots of volatility in the next two days, but there is potential for disappointment,” said Frank Klumpp, analyst at LBBW in Stuttgart.

Russian oil minister Alexander Novak told a closed-door briefing of energy analysts in Moscow on Wednesday that the deal would be loosely framed with few detailed commitments.

“The agreement will not be very rigidly formulated, it is more of a gentlemen’s agreement,” one of those present said, paraphrasing Novak’s words at the briefing.

“There is no plan to sign binding documents,” another person at the briefing said.

This suggests producers are unlikely to formally agree to rein in production, which now stands at about 2 million barrels per day (bpd) in excess of demand.

An oil output cut by global producers, following on from the output freeze initiative, is quite unlikely and would be months away, OPEC sources said, suggesting any additional action to boost prices is remote.

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Courtesy: The Globe And Mail

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