The euro zone’s near-deflation isn’t much out of line with the rest of the developed world’s.KAI PFAFFENBACH/Reuters
The Toronto stock market was slightly higher Wednesday as traders anticipate the announcement of stimulus measures to help the euro zone recovery and look to American employment numbers coming out at the end of the week.
The S&P/TSX composite index was ahead 16.79 points to 14,751.48.
The Canadian dollar was down 0.23 of a cent to 91.43 cents (U.S.) as the Bank of Canada announced it was keeping its key rate unchanged at one per cent.
U.S. indexes were mixed amid a disappointing read on private sector job creation during May.
The Dow Jones industrials were down 5.23 points to 16,717.11, the Nasdaq gained 10.37 points to 4,244.45 and the S&P 500 index was 1.67 points lower to 1,925.91.
Payroll firm ADP reported Wednesday that the U.S. private sector created 179,000 jobs during May, the fewest number in four months.
That reading came in two days before the release of the U.S. non-farm payrolls report for May. Economists have forecast that about 219,000 jobs were created during May following a much stronger expected 288,000 gain in April.
The employment news was somewhat offset by other data showing the American non-manufacturing sector expanding at a faster than forecast clip. The Institute for Supply Management said its index rose to 56.3, the highest level since last August and above expectations for a read of 55.5.
Canadian job figures for May also come out Friday and economists expect about 21,000 jobs were created after the economy shed 29,000 the previous month.
Meanwhile, markets are counting on European Central Bank president Mario Draghi to announce measures Thursday aimed at giving a lift to the euro zone's weak recovery and saving the region from falling into a deflationary spiral that would choke off growth.
Worries about deflation increased Tuesday in the wake of data showing that inflation in the euro zone came in at 0.5 per cent in May, down from 0.7 per cent in April.
"I would actually use the word 'scary' because growth has been very fragile at best and now you have disinflation and if that turns to deflation, we know the experience on this from Japan and it is not a pretty story," said Luciano Orengo, portfolio manager at Manulife Asset Management.
The latest data also showed that gross domestic product in the euro zone grew by a paltry 0.2 per cent in the first quarter.
Analysts are looking at a variety of options for the ECB, including an interest rate cut.
"I think the biggest wild card is whether it will do a form of quantitative easing," added Orengo.
The information technology sector was the biggest TSX advancer, up 0.85 per cent as BlackBerry ran up 27 cents to $8.42 (Canadian).
The gold sector was ahead 0.4 per cent, while August bullion lost early momentum and faded 50 cents to $1,244 (U.S.) an ounce.
The base metals segment led decliners, down 0.45 per cent while July copper fell four cents to $3.10 a pound.
The energy sector was flat while the July crude contract on the New York Mercantile Exchange gained 61 cents to $103.27 a barrel.
On the corporate front, Laurentian Bank of Canada (TSX:LB) shares edged up 56 cents to $48.14 as the bank posted a lower second-quarter profit of $31-million or 99 cents a share, compared with a profit of $33.8-million or $1.05 per share in the same quarter a year ago. But adjusted profit came in at $1.29 a share, five cents ahead of estimates. Laurentian also upped its quarterly dividend by a penny to 52 cents per share.