U.S. and Canadian stock markets opened with modest gains, finding encouragement in some positive U.S. housing numbers and calmer global markets. The advance was very tentative, however, as traders were awaiting further word on developments in Cyprus.
In early trading, the S&P/TSX composite index was up 37 points, or 0.2 per cent, at 12,819; the S&P 500 was up 4 points, or 0.2 per cent, at 1,556; and the Dow Jones industrial average was up 42 points, or 0.2 per cent, at 14,492. Key commodities were generally a little lower, with oil down 11 cents at $93.63 (U.S.) per barrel and gold down $3.10 at $1,601 per ounce.
The U.S. Commerce Department reported this morning that housing construction rose 0.8 per cent in February to an annualized rate of 917,000, as building of single-family homes rose to a nearly five-year high. The number of new building permits, an indicator of future construction, rose 4.6 per cent to an annualized level of 946,000. Overall, the data were a little better than economists’ projections and provided confidence that the housing sector was back on a solid foundation.
European markets have come off their lows from earlier today, with London's FTSE now in positive territory, up 0.2 per cent. Other indexes in the region, however, are lower, with France's CAC 40 down 0.5 per cent.
Cyprus's surprise decision over the weekend to introduce a one-off tax on bank deposits, which threatens to undermine investor confidence in the euro zone and throw the region back into a financial crisis, is still facing considerable uncertainty.
The Cyprus parliament reportedly was to vote on the proposal - aimed at meeting requirements for bail out funds - at 12 noon E.T. today. It's not clear, however, whether that will actually take place.
Reuters this morning is reporting that the country has created a draft bill for a levy on bank deposits that scraps the measure for savings under €20,000 ($25,860 U.S.) while keeping the 6.75 per cent to 9.9 per cent levy on larger deposits unchanged. The report did not say if the new structure for the levy raises the required €5.8 billion European officials have demanded in return for €10-billion in aid.
But Reuters also reported that parliament would likely reject the tax, and that prospect may result in the vote being delayed. Meanwhile, the Cypriot government is also reportedly working on different scenarios to raise funds.
While the situation in Cyprus is fluid, there is much more calm this morning than on Monday. Spanish bond yields, for instance, reached no higher than 5 per cent today after climbing as high as 5.08 per cent on Monday. In Asia, Japan's Nikkei managed a 2 per cent gain thanks to further weakness in the yen.
The U.S. Federal Reserve began a two-day meeting today, culminating in the central bank releasing its policy statement at 2 p.m.(ET) on Wednesday followed by a news conference from chairman Ben Bernanke. He's expected to comment that the Fed won't back down from its ultra-loose monetary policy for a long time to come - but the event could turn into the next big market mover.
Here's a look at some stocks moving on news this morning:
Lululemon Athletica Inc. said late Monday it will take a “significant” financial hit as a result of production problems and an expected shortage of its signature black “luon” women’s yoga pants. The company said certain shipments of the pants are too sheer and don’t meet the company’s standards, impacting about 17 percent of all women’s pants in its stores. Shares are down 4.5 per cent after having dropped by more than 7 per cent in the premarket.
Rona Inc. has appointed senior Metro Inc. executive Robert Sawyer as its new president and chief executive officer. Shares at the open were up 4.2 per cent.
Alimentation Couche-Tard Inc. said third-quarter earnings jumped to 75 cents a share from 48 cents. Adjusted for items, it earned 81 cents, below the Thomson Reuters mean estimate of 87 cents. Shares opened down 3.6 per cent.
Video game publisher Electronic Arts Inc. announced late Monday that CEO JOhn Riccitiello is stepping down. Shares are down 2.1 per cent.