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Thursday, June 3, 2010
TSX and NASDAQ leaders
Markets extend gains on U.S. economic data
June 03, 2010
Malcolm Morrison
The Toronto stock market was off to a positive start Thursday as a string of economic data showed that the U.S. economic recovery remained on track.
The S&P/TSX composite index moved 15 points higher to 11,795.7, but the market was held back by falling mining stocks while the TSX Venture Exchange gained 4.49 points to 1,488.6.
The Canadian dollar was down a slight 0.02 of a cent to 96.28 cents US.
Key reports from the U.S. jobs market, service industry and manufacturing sectors were providing the tone for the session.
Payroll company ADP reported that private employers added 55,000 jobs in May, about 5,000 short of expectations. That compares with 32,000 jobs added in April. The report comes a day ahead of the U.S. Labour Department’s key jobs data. ADP data is often considered a barometer for the strength of the government’s report.
Canadian employment data for May is also being released on Friday.
The Labour Department said Thursday that initial claims for jobless benefits fell to 453,000 last week. Economists had been forecasting claims to fall to 450,000.
A key report on the service sector is expected to show growth for fifth straight month. The Institute for Supply Management’s service sector index likely crept higher to 55.5 in May from 55.4 a month earlier, according to economists polled by Thomson Reuters. Any reading above 50 indicates growth.
Another report is expected to show that U.S. factory orders rose 1.8 per cent in April after climbing 1.1 per cent in March.
The resource-heavy TSX took in a mixed performance from the commodities sectors.
The energy sector was ahead 0.8 per cent as the July crude contract on the New York Mercantile Exchange gained 45 cents to US$73.31 a barrel. Canadian Natural Resources (TSX:CNQ) was up 80 cents to $37.48.
The base metals sector stepped back 0.26 per cent with the July copper contract in New York down four cents to US$3 a pound. Teck Resources (TSX:TCK.B) declined 49 cents to $35.57.
Industrials also supported the TSX with Canadian National Railways (TSX:CNR) ahead 63 cents to $61.79.
However, gold stocks were weak as bullion prices slipped with the August gold contract on the Nymex down $2.20 to US$1,220.40 an ounce. Goldcorp Inc. (TSX:G) faded 49 cents to $45.42.
The TSX and the Dow Jones industrial average both jumped about 200 points Wednesday, sparked in large part by an upbeat report on U.S. pending home sales which raised hopes that the housing market is turning around.
New York markets also advanced as U.S. retailers reported tepid business in May amid cool weather and fresh concerns about the economy. The reports follow a lacklustre April and underscores how fragile the economic recovery remains.
A mix of stores found business challenging during the month. Department store chain Stage Stores Inc. and teen merchant Wet Seal Inc. both are reporting declines in revenue at stores open at least a year. Costco Wholesale Corp. is reporting a gain slightly below Wall Street expectations.
The Dow Jones industrial average moved up 33.9 points to 10,283.4.
The Nasdaq composite index rose 8.55 points to 2,289.62 while the S&P 500 index was ahead three points to 1,101.4.
In other corporate news, British-Swiss mining company Xstrata PLC said it is halting investment in two projects in Australia because of the government’s proposed new tax on mining profits. The company has operations around the world, including Canada, where it is a major nickel producer.
Xstrata’s decision to axe investments worth US$496 million deepens a backlash from the industry in reaction to the government’s plans to introduce a new 40 per cent “Resource Super Profits Tax,” or RSPT, from 2012.
Canadian Western Bank (TSX:CWB) shares climbed 73 cents to $24.22 after it said second-quarter net income rose 76 per cent to $37.9 million, or 47 cents per share, from $21.6 million or 30 cents per share. Revenues increased to $111 million from $75.4 million.
The strong advance on Wednesday also helped Asian stocks move higher, though Chinese shares were dogged by worries about an economic slowdown in the country.
“For the time being an air of opportunism does seem to be washing over the market with equities looking a little on the cheap side,” said Ben Potter, research analyst at IG Markets in London.
In Asia, Japan’s benchmark Nikkei 225 stock index climbed 3.2 per cent, South Korea’s Kospi gained 1.7 per cent and Hong Kong’s Hang Seng was 1.8 per cent higher. The exception in Asia was the benchmark Shanghai Composite Index, which fell 0.7 per cent.
London’s FTSE 100 index gained 1.8 per cent, Frankfurt’s DAX was up 1.68 per cent and the Paris CAC 40 was ahead 2.12 per cent.
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