Toronto stock market heads for negative session amid disappointing Alcoa outlook

TORONTO – The Toronto stock market looked set to head lower Wednesday as a weak outlook from resource giant Alcoa Inc. added to a pessimistic global economic assessment from the International Monetary Fund.

The Canadian dollar rose 0.11 of a cent to 102.3 cents US.

New York futures were negative after Alcoa predicted aluminum demand would grow six per cent this year, down from seven per cent in the previous quarter, primarily because of slower growth in China.

The aluminum producer is viewed as a broad economic bellwether as its products are used in a wide variety of industries, from vehicles to appliances.

Alcoa shares were down about 1.5 per cent in pre-market trading as the company kicked off the start of the third-quarter reporting season by posting a loss of US$143 million, largely on one-time charges while adjusted results beat estimates. Revenue of $5.83 billion also beat expectations.

The Dow Jones industrial futures were off 18 points to 13,394, the Nasdaq futures were 1.5 points lower at 2,732.5 and the S&P 500 futures dipped 0.6 of a point to 1,435.3.

North American markets racked up sharp losses Tuesday after the International Monetary Fund reduced its growth forecast for the world economy to 3.3 per cent this year from its previous estimate of 3.5 per cent. The IMF forecast for growth in 2013 is 3.6 per cent, down from 3.9 per cent three months ago and 4.1 per cent in April. The IMF also reiterated its concerns over the crisis in the eurozone and warned that the recession in Spain was worse than it thought.

Expectations for third-quarter earnings have been ratcheted lower because of global growth concerns. Analysts expect earnings for Standard & Poor's 500 companies to be lower than a year ago, the first time that has happened in almost three years.

On the Canadian earnings front, pharmacy chain franchisor Jean Coutu Group (TSX:PJC.A) said Wednesday that its quarterly net profit was $51.2 million or 23 cents per share. That compared with $66.4 million or 20 cents per share in the comparable year-earlier period when it recorded an unusual gain on the sale of U.S. assets. Revenue for its fiscal 2013 second quarter rose to $658.7 million from $635.2 million in the same fiscal 2012 period.

Oil prices were little changed after concerns about supplies from the Middle East and the North Sea had pushed crude prices up more than US$3 on Tuesday. On Wednesday, the November crude contract on the New York Mercantile Exchange slipped six cents to US$92.33 a barrel.

December gold gained $3.40 to US$1,768.40 an ounce while December copper was unchanged at US$3.72 a pound.

European bourses were lower with London's FTSE 100 index off 0.42 per cent, Frankfurt's DAX down 0.25 per cent and the Paris CAC 40 down 0.16 per cent.

Traders also took in news that Britain's BAE Systems PLC is abandoning a proposed merger with European counterpart EADS NV that would have created a global defence and aerospace giant. The deal had faced political objections from the governments of the U.K., France and Germany.

The European debt crisis was also in focus as Italy was forced to pay slightly higher interest rates in a pair of short-term auctions.

Particularly noteworthy was the increase in the interest rate on the one-year bonds to 1.91 per cent from 1.69 per cent on the previous issue. However, demand was strong.

Elsewhere, Japan's Nikkei 225 index tumbled two per cent to its lowest close in two months, Hong Kong's Hang Seng fell 0.1 per cent while South Korea's Kospi dropped 1.6 per cent.

The Shanghai Composite Index rose 0.2 per cent on hopes that Chinese authorities are readying measures to help reverse the decline in growth in the world's second-largest economy.