TORONTO, Feb 7 (Reuters) - The Toronto Stock Exchange’s main index was set to decline on Thursday morning, extending a late-day slide in the previous session after warnings from U.S. corporations over the state of the U.S. economy.
Investors will also evaluate a mixed bag of results from Canadian firms Loblaw (L.TO), Air Canada ACa.TOACb.TO, and Thomson TOC.TO as fourth-quarter earnings season rolls along.
But the focus will likely be on the United States, Canada’s key trade partner, where network equipment-maker Cisco Systems (CSCO.O) warned of slowing orders, casting a shadow over TSX technology stocks.
“Cisco is in a position to know what is happening throughout the economy, and they’re making a judgment that things will be weak throughout the system,” said Douglas Davis, president at Davis-Rea.
“I think the market would sell off on that kind of news.”
Worries over a slowing U.S. economy have dominated movement on the Toronto index over the last couple of months. On Thursday, Wal-Mart (WMT.N) reported disappointing January sales, further eroding confidence in the economy.
The S&P/TSX composite index .GSPTSE is down about 7 percent so far this year.
TSX retailers could be dragged lower along with Loblaw, Canada’s biggest grocer, whose earnings missed expectations amid price cutting that is intended to fend off growing competition from Wal-Mart. For details, see: [nN06305429]
Elsewhere, Air Canada, the country’s top airline, reported a higher fourth-quarter profit, while earnings at electronic publishing firm Thomson jumped 11 percent. See: [nN07230586] and [nN07355997]
The resource-heavy TSX index was seen getting little support from commodities, which were mostly lower in early action.
The index starts the day at 12,867.20 after closing down 64.75 points, or 0.5 percent, in the previous session. It has dropped 3.4 percent in three days.
$1=$1.01 Canadian Reporting by Jonathan Spicer; Editing by Renato Andrade