TMXmoneyTMXmoney - invest with insight

TSX to open higher: U.S. job data buoys sentiment, HP splitting into 2 companies

Malcolm Morrison, The Canadian Press

TORONTO - The Toronto stock market was set to advance Monday as a solid U.S. jobs report released at the end of last week continued to encourage buyers.

Traders also took in major news from the tech sector where Hewlett-Packard is splitting itself into two companies. One will focus on its personal computer and printer business and another on technology services, such as data storage, servers and software. HP shares were up 5.7 per cent to US$37.20 in pre-market trading in New York.

Investors will also look to the start this week of a flood of third-quarter earnings reports in the U.S., including resource giant Alcoa on Wednesday.

The Canadian dollar rose 0.32 of a cent to 89.14 cents US as the greenback weakened. The dollar sank 3/4 of a U.S. cent Friday to a six-month low as the loonie was depressed by weak trade data and a U.S. currency that appreciated further on stronger job creation in the U.S. last month.

U.S. futures were also positive as the Dow Jones industrial futures gained 48 points to 16,969, the Nasdaq futures rose 10.8 points to 4,026.8 and the S&P 500 futures were up 5.5 points to 1,965.75.

The employment data showed employers added 248,000 jobs in September, beating market expectations. Unemployment fell to a six-year low of 5.9 per cent. The U.S. Labor Department said hiring in July and August also was stronger than initially estimated.

The data supported the view that the U.S. is the major support of the global economy with conditions weakening in Asia and particularly Europe.

On Monday, traders took in more data underscoring the weakness in Europe. German factory orders dropped 5.7 per cent in August from the previous month, worse than the 2.5 per cent drop forecast. Analysts blamed weak demand from eurozone markets and uncertainty over Ukraine and the Middle East.

A weaker U.S. dollar helped support commodity prices with November crude in New York up 23 cents to US$89.97 a barrel, December copper was three cents higher to US$3.02 a pound while December gold gained $2.50 to US$1,195.40 an ounce.

The TSX fell 1.6 per cent last week — leaving the main index up 8.7 per cent year-to-date — led by weakness in the resource sector which mirrored severe losses in commodities.

Analysts laid much of the blame at a U.S. dollar that has strengthened considerably over the last few weeks amid heightened speculation that the Federal Reserve could move to hike rate sooner than expected.

But a major reason for the stronger greenback has been a euro which has weakened against a backdrop of practically non-existent inflation, weak economic data and a vow from the European Central Bank to take action to get the eurozone out of a deep funk, including driving interest rates to near zero.

In other corporate developments, Air Canada (TSX:AC.B) flights had fewer empty seats last month as the airline reported a load factor of 84.7 per cent for September, up from 83.2 per cent a year ago. Air Canada also said Monday it has reached a tentative agreement with the union representing its pilots for a new 10-year contract.