Traders will again focus on corporate earnings as big Canadian companies start to release quarterly reports.
North American markets racked up solid gains last week, with the TSX ahead 1.7 per cent while the Dow industrials ran ahead 2.4 per cent, partly because Chinese economic growth in the first quarter came in better than expected. Also, the U.S. Federal Reserve's latest regional survey showed that the American economy picked up over the past two months as bitter winter weather subsided.
It was a positive change from the previous week when U.S. indexes sustained sharp losses as traders rotated out of expensive biotechs and technology stocks.
The major Canadian reports this week will come from Teck Resources (TSX:TCK.B) and Canadian Pacific Railway (TSX:CP).
Teck's share price has suffered over the last 52 weeks, coming down from a high of $31.25 to a close on Thursday of $24.31, near its 52-week low of $21.11. Copper prices have tumbled 11 per cent this year and coal prices have fared even worse, falling from US$300 a tonne in 2011 to about $120 a tonne.
"The base metals remain challenged by the fact that we're still dealing with a slower global growth environment than we were, which is not great news for base metals," said Andrew Pyle, senior wealth adviser, portfolio manager at ScotiaMcLeod in Peterborough, Ont.
"At the same time, Teck has a relation to coal and there have been indications that we're dealing with pretty substantial coal supplies around the world, depressing coal prices."
Meanwhile, shareholders in Canadian Pacific will be looking to see if the railway's results justify the 36 per cent run-up in the stock price over the last 52 weeks.
"The results have to be really amazing to validate the trajectory we have seen in these stocks," said Pyle.
"Even if the results are OK, we could still see these stock prices come down simply because of the valuations of this group. The group as a whole is vulnerable to a pullback."
Traders will look to see how severe winter weather impacted the railway in the quarter and how increased petroleum shipments have lifted the bottom line.
Other prominent earnings reports this week include telcom Rogers Communications (TSX:RCI.B) on Monday and electronics manufacturer Celestica (TSX:CLS) on Wednesday.
It's a light week for economic data.
The primary economic news for the week comes out Wednesday when Statistics Canada is expected to report that retail sales in February rose 0.4 per cent from January, when sales posted a big 1.3 per cent bounce from the poor performance registered in December because of severe ice storms.
Economists expect a good chunk of the gain will be driven by higher gasoline prices.
The big news the U.S. is March durable goods data coming out Thursday. Economists looked for goods orders to have risen by 1.9 per cent following a 2.2 per cent gain in February. Excluding the volatile transportation segment, orders are expected to have risen by 0.5 per cent.