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Traders from Knight Capital watch CEO Thomas Joyce give a television interview from the company’s post on the floor of the New York Stock Exchange Aug. 2, 2012, after an erroneous trading position wiped out $440-million (U.S.) of its capital. (Brendan Mcdermid/Reuters)
Traders from Knight Capital watch CEO Thomas Joyce give a television interview from the company’s post on the floor of the New York Stock Exchange Aug. 2, 2012, after an erroneous trading position wiped out $440-million (U.S.) of its capital. (Brendan Mcdermid/Reuters)

Inside the Market

At the open: GM, Transat shares surge 8% Add to ...

North American stock markets were mixed at the open, as traders kept hopes alive that the U.S. won't go over the "fiscal cliff" of more than $600-billion in spending cuts and tax increases set to take hold Jan. 1. General Motors Co. was a key advancer, shooting up 8 per cent on news that the U.S. government is selling a $5.5-billion stake back to the company. In Canada, Transat A.T. was also up nearly 8 per cent at the open as it reported better-than-expected quarterly results.

In early trading, the S&P 500 was snuggled close to Tuesday's two-month closing high, down 3 points, or 0.2 per cent, at 1,443. The Dow Jones industrial average was down 12 points, or 0.09 per cent, at 13,338, while in Canada the S&P/TSX composite index was up 44 points, or 0.3 per cent, at 12,379.

If U.S. negotiators fail in their ongoing efforts to avoid the looming fiscal mess, the world's largest economy is likely to slip back into recession and bring global markets down it.

But this week has seen some progress, spurring thoughts that an agreement may materialize that can at least blunt the impact of the "fiscal cliff."

Both the Republicans and Democrats have shown some flexibility on the issue of income thresholds that would be subject to more taxation. Republican House Speaker John Boehner also reportedly has a "Plan B" in mind that would increase taxes on incomes of $1-million and above, though it was met with a chilly reception by Democrats. Overall, the parties do appear much closer to a deal than just a few days ago, but there are concerns negotiations could fall apart quickly.

Overnight, Christmas came early in Japan, where the Nikkei surged 2.39 per cent and catapulted over the 10,000-point mark for its highest close since early April. Financial and exporter shares led the rally, which was ignited by Wall Street's gains on Tuesday and hopes for a resolution to the U.S. budgetary discussions.

European stocks posted modest gains overnight as the German IFO business confidence survey came in better than expected, rising to 102.4 in December from 101.4 in November.

In economic news this morning, Statistics Canada said wholesale trade rose 0.9 per cent in October from September, ahead of forecasts calling for a gain of 0.5 per cent. Teranet-National Bank's house price index for Canada showed a continued slowdown in the housing market here, with the index falling 0.4 per cent in November from October. That was up 3.3 per cent, however, from a year earlier.

Stateside, the U.S. Commerce Department said housing starts fell 3 per cent to a seasonally adjusted annual rate of 861,000 in November, below forecasts for 875,000 starts. Building permits came in at 899,000, ahead of forecasts of 875,000.

Here's a closer look at some of the stocks moving on news this morning:

General Motors said it will spend $5.5-billion (U.S.), or $27.50 per share, to buy back 200 million shares of its stock from the U.S. government. The government also plans to sell its remaining stake in the automaker within the next 12 to 15 months. Shares in GM are up 8 per cent in early trading at $27.53.

Transat A.T. Inc. shares jumped nearly 8 per cent in early trading after it reported adjusted profit in its latest quarter of 75 cents a share, easily surpassing the consensus estimate of 42 cents. It also reported it had to restate its financial statements for 2011 due to a recurring accounting error. As a result, it increased its net loss for the year ended Oct. 31, 2011 to $14.7-million from $11.8-million.

FedEx Corp. profit fell 11.9 per cent in the second quarter, less than investors had feared, as the company struggled to improve demand at its air freight business. It maintained its forecast for the full fiscal year ending in May. Shares are up 1.3 per cent.

Oracle Corp. is up 3.3 per cent in early trading after the software developer reported better-than-expected second-quarter earnings late Tuesday.

Alcoa shares are down 1 per cent after Moody’s Investors Service placed the aluminum producer under review for a downgrade amid low prices for the metal.

Knight Capital Group has confirmed a deal that will see it be acquired by Getco for $3.75 a share in cash. Knight Capital shares are up just over 6 per cent.


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