The Toronto stock market was set for a higher open Tuesday after Germany posted stronger-than-expected growth during the second quarter.
The Canadian dollar was up 0.06 of a cent to 100.82 cents (U.S.) amid rising prices for copper and crude oil.
U.S. futures were higher. The Dow Jones industrial futures gained 22 points to 13,159, the Nasdaq futures were up 3.5 points to 2,731.5 and the S&P 500 futures rose 2.1 points to 1,404.7.
Germany, Europe’s biggest economy, posted 0.3 per cent growth in the second quarter, beating expectations of a 0.2 per cent increase though slowing from the first quarter’s 0.5 per cent growth.
At the same time, Eurostat, the European Union’s statistics agency, said that the economies of both the eurozone and the wider 27-country EU shrank by a quarterly rate of 0.2 per cent in the second quarter of the year. In the first quarter, output for both regions was flat. A recession is officially defined as two straight quarters of falling output.
Spain, Portugal, Cyprus and Greece are already mired in recession.
“The debt crisis and resulting tough austerity and reform are keeping (southern eurozone countries) in recession, while Northern Europe skirts by with modest growth,” observed BMO Capital Markets senior economist Benjamin Reitzes.
The worsening debt crisis has worsened the prospects for an economic recovery in the rest of the world.
Policymakers are urging more decisive action, particularly from the European Central Bank, to deal with the debt crisis to restore confidence to the global economy.
Markets have found traction recently after the ECB promised last month to do “whatever it takes” to keep the monetary union intact.
Disappointing economic data has also raised hopes that central banks in the U.S. and China will move to undertake further stimulus measures.
Crude oil prices advanced ahead of the release of data on U.S. oil stockpiles. The September crude contract on the New York Mercantile Exchange gained 28 cents to $93.01 a barrel.
Data for the week ending Aug. 10 is expected to show draws of 1.5 million barrels in crude oil stocks and 2.3 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Metal prices were also higher after two days of declines in the wake of surprising drops in Chinese exports and Japanese economic growth. The September copper contract on the Nymex edged up a penny to $3.36 a pound.
December gold climbed $1.70 to $1,614.30 an ounce.
On the corporate front, a showdown could be brewing between fertilizer giant Agrium and a major investor.
The Calgary-based company says it has carefully evaluated the idea of spinning off its retail division and decided against the plan because shareholders of the agricultural services company would face too much risk. Agrium made the statement after the Wall Street Journal reported U.S. hedge fund Jana Partners has purchased a large stake in Agrium in a move to push the fertilizer giant to cut costs and sell its retail arm. The Journal reports the fund has accumulated almost 5 per cent of Agrium stock, making it the company’s largest shareholder.
Agrium shares rose 2.8 per cent in pre-open trading in New York.
European bourses advanced with London’s FTSE 100 index up 0.36 per cent, Frankfurt’s DAX climbed 0.78 per cent while the Paris CAC 40 was ahead 0.44 per cent.
Earlier in Asia, Japan’s Nikkei 225 rose 0.5 per cent, Hong Kong’s Hang Seng added 1.1 per cent, South Korea’s Kospi rose 1.3 per cent while on mainland China, the Shanghai Composite Index gained 0.3 per cent while the smaller Shenzhen Composite Index gained 0.7 per cent.
In other corporate developments, Home Depot’s net income rose 13 per cent in its fiscal second quarter to $1.53-billion, or $1.01 per share. A year earlier it earned $1.36-billion, or 87 cents per share.
The latest results topped the 97 cents per share that analysts polled by FactSet expected.
Revenue climbed to $20.57-billion from $20.23-billion, up 2 per cent. Wall Street expected higher revenue of $20.74-billion but its shares climbed 1.1 per cent in pre-open trading.
ATS Automation Tooling Systems Inc. had a $9.8-million (Canadian) profit in its latest quarter, compared to a loss of $5-million or six cents per share a year ago, as it reduced losses from its troubled solar equipment arm.