Shawshank, VA 9/22/2011 (PennyPayDay) – Falling commodities and weak cues from the global equity markets are likely to put pressure on Canadian stocks at open Thursday. Global stocks suffered steep losses after the Federal Reserve yesterday noted "there are significant downside risks to the economic outlook," making investors more nervous.The Fed said the U.S. economic outlook remained grim, even as it announced buying of $400-billion worth of longer-term bonds and selling an equal amount of short-term bonds, maintaining its balance sheet but putting downward pressure on longer-term interest rates.
On Wednesday, the S&P/TSX Composite Index plummeted 254.87 points or 2.09 percent to11,955.01.
The price of crude oil moved down to its monthly low as the U.S. dollar was trading firm versus a basket of currencies. Meanwhile, China's PMI came in below 50 in September, escalating concerns that crude oil demand from the region may be falling. HSBC's China Flash PMI dipped to 49.4 in September from August's final reading of 49.9 and hovered below the 50-point mark for the third straight month. Crude for November lost $4.38 to $81.54 a barrel.
The price of gold dipped below $1,750 as the U.S. dollar was trading firm after the Federal Reserve announced buying of $400-billion worth of longer-term bonds and selling an equal amount of short-term bonds. Gold for December lost $70.70 to $1,737.40 an ounce.
In corporate news from Canada, gold-focused royalty company Franco-Nevada Corp. said it would acquire Lumina Royalty Corp. by way of a court approved plan of arrangement for about $66 million.
Online IT infrastructure provider PEER 1 Network Enterprises swung to profit in fourth quarter, reporting net income of $0.02 million compared to a net loss of $0.37 million a year earlier.
Semiconductor maker Gennum Corp. reported a lower third-quarter profit of $3.3 million or $0.10 per share compared to $5.3 million or $0.15 per share in the year-ago period. Adjusted for non-recurring items after tax, net earnings for the quarter were $0.14 per share, compared with $0.15 last year. Analysts were expecting the company to report earnings of $0.10 per share for the quarter.
Junior oil and gas exploration company Southern Pacific Resources said its fiscal year 2011 profit rose to C$14.3 million from C$8.2 million in the year-ago period. However, earnings per share came in unchanged at $0.04 as the number of outstanding shares were higher at 338.8 million from 202.7 million in the year ago period.
Independent power producer Maxim Power Corp. reiterated its guidance for 2011 and sees funds from operations of C$34.85 million or C$0.65 per share.
In economic news, Statistics Canada said retail sales declined 0.6 percent to C$37.5 billion in July, after an upwardly revised 0.8 percent gain in June. Economists expected a more modest decline of 0.3 percent from the 0.7 percent initially reported for the previous month.
From south of the border, the U.S. Labor Department said the seasonally adjusted new unemployment claims came in at 423,000 in the week ended September 17. Economists were expecting the claims to fall to 420,000 from the 428,000 originally reported for the previous week.
In economic news from the euro zone, the private sector contracted in September for the first time since July 2009, flash estimate from Markit Economics showed. The flash composite output index dipped to 49.2 from 50.7 in August. The indicator stayed slightly below the 49.8 reading expected by economists. A reading below 50 indicates contraction in the sector.
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