Canadian stocks may extend losses at open Thursday as traders grappled with the market implications of a possible tapering of U.S. quantitative easing, ahead of the Federal Reserve's next policy meeting due on on June 18-19. Also, worries over economic growth resurfaced after the World Bank lowered its growth forecasts for the global economy, citing deeper-than-expected recession in the euro area and muted growth in developing countries.
Releasing the June edition of the Global Economic Prospects, the lender said it now expects the world economy to grow 2.2 percent this year, decelerating from the 2.3 percent expansion in 2012. The projection was weaker than the January forecast for a 2.4 percent expansion. The growth is expected to strengthen to 3 percent in 2014 while the January report predicted growth of 3.1 percent. The outlook for 2015 was kept unchanged at 3.3 percent growth.
U.S. stock futures were pointing to a lower open.
On Wednesday, the S&P/TSX Composite Index extended losses for a second session, dipping 113.69 points or 0.93 percent to 12,109.89.
The price of crude oil was ticking lower Thursday morning amid demand growth worries after the World Bank lowered its growth forecasts for the global economy, citing deeper-than-expected recession in the euro area and muted growth in developing countries. Crude for July delivery shed $0.48 to $95.40 a barrel.
The price of gold was struggling to move past the $1,400-mark Thursday morning, with the US dollar trading mixed amid the release of macroeconomic data. Gold for August lost $9.90 to $1,382.10 an ounce.
In corporate news from Canada, base metals mining company Lundin Mining Corp. (LUN.TO) said it will buy the Eagle nickel and copper mine in the U.S. from Anglo-Australian mining giant Rio Tinto plc for about $325 million. The transaction is expected to be completed in July 2013.
Real estate investment company Timbercreek Mortgage Investment Corp. (TMC.TO) said Wednesday it will satisfy its reinvestment of dividends for participants in the Dividend Reinvestment Plan by acquiring shares in the open market rather than by issuing from treasury.
BRP Inc. (DOO.TO) reported a sharp drop in first-quarter net income to C$25.7 million from C$54.6 million last year. However, on a normalized basis, quarterly net income amounted to C$53.4 million or C$0.52 a share up compared with the prior year's C$49.6 million or C$0.49 a share.
In economic news Statistics Canada said the New Housing Price Index rose 0.2 percent in April, following a 0.1 percent increase in March. On a year-over-year basis, the NHPI rose 2.0 percent in the 12 months to April, following a similar increase the previous month.
From south of the border, the U.S. Labor Department said initial jobless claims fell to 334,000, a decrease of 12,000 from the previous week's unrevised figure of 346,000. The modest decrease came as a surprise to economists, who had been expecting initial jobless claims to edge up to 350,000.
Simultaneously, the Commerce Department said retail sales increased by 0.6 percent in May after edging up by 0.1 percent in April. The sales growth came in just above economist estimates for a 0.5 percent increase. Excluding a 1.8 percent jump in sales by motor vehicle and parts dealers, retail sales increased by a more modest 0.3 percent in May compared to expectations for 0.4 percent growth.
From the euro zone, Germany's wholesale prices declined for the second consecutive month in May on lower cost of gaseous fuels, Destatis reported. Wholesale prices dropped unexpectedly by 0.1 percent from a year ago, after easing 0.4 percent in April. Economists had forecast a 0.2 percent rise for May.
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