Toronto stock market returning to its 2009 highs Tuesday

Loblaw, energy, gold boost Toronto markets

November 17, 2009

Malcolm Morrison

Rising energy stocks and solid earnings from grocery chain Loblaw Companies Ltd. (TSX: L) sent the Toronto stock market returning to its 2009 highs Tuesday.

The S&P/TSX composite index moved ahead 80.7 points to 11,593, about eight points higher than the previous closing high reached in mid-September, with all sectors positive save for a dip in the base metals sector.

The positive showing in Toronto followed a 105-point advance Monday and a 1.39 per cent gain last week.

Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, said there are good reasons why the TSX is up more than 52 per cent since the lows of early March.

"The basic message is that interest rates will stay low, and people who buy GICs and keep their money in chequing accounts are not going to be rewarded with very much in the way of interest income," he said, "so that's why money is going into various other asset classes, including housing and equities."

The Canadian dollar moved down 0.69 of a cent to 94.81 cents US.

Earnings news from Loblaw helped send the consumer staples sector up 0.84 per cent.

Its shares moved up $1.23 to $31.63 after the company reported quarterly net income of $189 million or 69 cents per share, up from year-ago profit of $157 million or 57 cents per share. The grocer also said that revenues totalled $9.47 billion for the quarter, down slightly from $9.49 billion last year.

Shares in rival grocery chain Metro Inc. (TSX: MRU.A) gained $1.09 to $35.65.

The financial sector rose 0.59 per cent with CIBC (TSX: CM) ahead 86 cents to $66.71.

The investment and corporate banking arm of BMO Financial Group (TSX: BMO) said Monday it has signed a deal with U.S. hedge fund Paloma Securities to acquire the company's global securities lending business. Financial details weren't disclosed and BMO shares were up $1 at $52.59.

The energy sector was up 0.72 per cent as the December crude contract on the New York Mercantile Exchange gained 72 cents to US$79.62 a barrel. Suncor Energy (TSX: SU) advanced 76 cents to C$38.80.

Railway stocks helped push the industrials sector ahead 0.5 per cent, with Canadian National Railways (TSX: CNR) up 68 cents to $57.78.

CAE (TSX: CAE) shares rose 10 cents to $8.79 as it announced the sale of two ARJ21 flight simulators worth $35 million to COMAC Shanghai Aircraft Customer Service Co.

The gold sector improved 0.48 per cent as the December gold contract on the Nymex marginally improved on Monday's latest record close, up 20 cents to US$1,139.40 an ounce. Barrick Gold Corp. (TSX: ABX) gained 82 cents to $46.97.

The base metals sector was flat as December copper in New York was unchanged at US$3.10 a pound after running up 13 cents Monday. HudBay Minerals (TSX: HBM) declined 39 cents to C$15.94.

The TSX Venture Exchange moved 3.6 points higher to 1,381.54.

Disappointing reports about retailers and manufacturing kept New York indexes weak as the Dow Jones industrials added 8.2 points to 10,415.1 after gaining 136 points Monday.

The Nasdaq composite index was up 1.57 points to 2,199.42 while the S&P 500 index was off 0.85 of a point to 1,108.45.

Investors examined earnings from large U.S. retailers, looking for signs of strength from consumers. Consumer spending accounts for about 70 per cent of all U.S. economic activity and a return of shoppers – especially during the holiday season – is considered necessary for a strong economic recovery.

Home Depot Inc. said earnings and sales fell during the most recent quarter but beat analysts' expectations. The largest home improvement retailer in the U.S. also said it is seeing signs of stabilization in the housing market, which has been hammered in recent years. Its shares fell 87 cents to $26.78.

Saks Inc. and Target Corp. also reported better-than-expected third-quarter results Tuesday morning, but say they remain cautious of a potential rebound ahead of the key upcoming holiday season.

On the economic front, a report on industrial production disappointed the market. The Fed said production at U.S. factories, mines and utilities rose 0.1 per cent in October, less than the 0.4 per cent predicted by economists polled by Thomson Reuters.

U.S. wholesale prices rose less than expected in October as the weak economy keeps inflationary pressures largely in check.

The Labour Department said Tuesday that its producer price index rose 0.3 per cent last month, after falling 0.6 per cent in September. Analysts had expected a 0.5 per cent gain.

In other corporate news, shares in steel processor Royal Laser Corp. (TSX: RLC) surged six cents or 26.6 per cent to 28.5 cents after it said Tuesday it has received an unsolicited takeover offer from an unnamed company.

Royal Laser services, processes and distributes flat-rolled steel for the automotive industry. It also fabricates products for the industrial, environmental and construction industries.