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Inside the Market

At the open: Stocks edge lower on economic jitters Add to ...

Canadian and U.S. stock markets opened with modest losses after buying momentum in the premarket soon fizzled out. While some investors were hoping to snap up oversold shares after the S&P 500’s 1 per cent dip last week – its worst performance on the year – the overall market tone remained cautious.

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In early trading, the S&P/TSX composite index was down 19 points, or 0.1 per cent, at 12,312; the S&P 500 was down a fraction of a point, or 0.02 per cent, at 1,552; and the Dow Jones industrial average was down 22 points, or 0.1 per cent, at 14,541. Gold was down nearly $2 an ounce after having been higher earlier this morning; crude oil was up about 40 cents per barrel.

For the most part, traders are casting aside worries about potential slowing in the U.S. economy – a key concern after disappointing jobs figures on Friday – and are hoping last week’s dip is an opportunity to load up more shares before fresh records are recorded in the U.S. indexes.

There’s little U.S. economic data to drive markets today; instead, U.S. corporate earnings will be a primary focus, as Alcoa Inc. kicks off the first-quarter reporting season with its results after North American markets close. Analysts expect the aluminum maker to post a profit of 8 cents a share, down from 10 cents a year ago, and sales are forecast to fall 1.6 per cent.

That slowdown in earnings is expected to set the pace for the entire first-quarter earnings season. Analysts’ growth forecasts for the quarter are the most negative in years, with S&P 50 companies expected to see a 1.8 per cent decrease in earnings, according to Bloomberg. That would be the first year-over-year drop in profit since 2009.

Most major European markets are higher this morning, with London’s FTSE 100 up 0.4 per cent and France’s CAC 40 up 0.6 per cent. The positive tone was partly supported by a report showing a rebound in German industrial production in February, which came as some relief after disappointing reports last week on euro zone services output and retail sales. The stock market in Portugal was an exception – it was down about 1 per cent today after a high court there struck down some of the nation’s austerity measures. Greek stocks also were under pressure after its government halted merger plans by National Bank of Greece SA and Eurobank Ergasias SA. The Athens Stock Exchange index is up 0.1 per cent but was well into negative territory earlier today.

Asian markets were rather subdued overnight, except for Japan, which continued to see a rally thanks to unprecedented stimulus measures revealed by its central bank last week. The Nikkei rose 2.8 per cent, while the yen weakened again overnight and fell through the 99 per U.S. dollar level for the first time in four years.

While copper has been performing dismally of late, today is an exception, with prices for the metal up nearly 1 per cent in New York after miners in Chile said they will hold a nationwide strike.

In corporate news this morning, General Electric agreed to buy Lufkin Industries for $3.38-billion in cash, or $88.50 a share. Lufkin shares are up 37 per cent to $87.96.

JPMorgan downgraded Johnson & Johnson today to “neutral” from “outperform,” but raised its price target to $83 from $77. Shares in Johnson & Johnson are down 1.6 per cent.

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