The screens at the TMX Broadcast Centre in Toronto show the closing numbers of the TSX on Tuesday, July 3, 2012.Matthew Sherwood/The Globe and Mail
U.S. stocks opened higher, with worries over the ramifications of the Cyprus bailout deal fading into the background as more signs emerged of a sustainable recovery in U.S. housing prices.
In early trading, the S&P 500 index was up 6 points, or 0.4 per cent, at 1,558. The Dow Jones industrial average was up 64 points, or 0.4 per cent, at 14,513.
The S&P/TSX composite index, meanwhile, opened nearly unchanged, as precious metals stocks were under pressure from a lower gold price. New York futures were down about $7.50 to $1,597 (U.S.) an ounce; Barrick Gold was down 0.6 per cent.
Unlike Monday, the TSX didn't the have the drag of a declining stock price in Research In Motion Ltd. weighing on the index. Its shares were up 3 per cent at the open, with little in the way of fresh news as the company prepares to issue its latest quarterly results on Thursday morning.
The last-minute bailout deal over the weekend provided Cyprus with €10-billion ($13-billion U.S.) in financial aid in exchange for the country shutting down its second largest bank and taxing uninsured, large depositors. After the deal was announced, the Dutch finance minister suggested that the Cyprus deal could be used elsewhere in the euro zone as a template for bailouts, igniting a sell-off in stocks. The finance minister later backed away from his comments, but markets still have lingering concerns over how large depositors in other countries may one day face similar measures as the European debt crisis plays out.
There were some decent economic reports out of the U.S. this morning that helped to boost sentiment.
Durable goods orders, which provides a forward-looking snapshot of manufacturing demand, rose 5.7 per cent in February, a bit better than the 3.5 per cent month-over-month rise economists expected. However, non-defence capital goods orders, which excludes aircraft, fell 2.7 per cent.
The S&P/Case-Shiller's 20-city home price index for January rose 0.1 per cent from December, or 1 per cent on a seasonally adjusted basis. Its 10-city index was up 0.2 per cent. These were the biggest increases since the housing bubble burst. A separate report showed February new home sales of 411,000, a bit less than the 420,000 economists had forecast.
A report on U.S. consumer confidence wasn't terribly uplifting, however. The Conference Board reading of 59.7 was well below the 67.5 that the Street was expecting.
Darcy Keith