October 20, 2010
Malcolm Morrison
The Toronto stock market was higher Wednesday amid positive U.S. earnings reports and a revival of commodity stocks following losses a day earlier in the wake of a surprise interest rate hike by China.
The S&P/TSX composite index gained 73.9 points to 12,644.4 while the TSX Venture Exchange was up 37.68 points at 1,852.59.
The Canadian dollar also headed higher, up a 0.73 of a cent to 97.64 cents US, after a strengthening U.S. currency and lower prices for oil and metals had pushed the loonie down 1.7 cents on Tuesday.
The base metals sector led TSX advancers, up 2.8 per cent with December copper ahead three cents at US$3.79 following a 10-cent slide Tuesday. Teck Resources (TSX: TCK.B) ran up $1.18 to C$45.07 and Equinox Minerals Ltd. (TSX: EQN) gained 18 cents to $5.87.
Gold prices made headway following a US$36 drop Tuesday, up $8.80 to US$1,344.80 an ounce. The gold sector rose 0.88 per cent with Barrick Gold Corp. (TSX: ABX) climbing 61 cents to C$47.52 and Kinross Gold Corp. (TSX: K) improving by 24 cents to $18.52.
Iamgold Corp. (TSX: IMG) shares gained 52 cents to $17.77. The miner said it was launching a study to consider an expansion to the Essakane gold mine in Burkina Faso that could double processing in the mine’s later years and boost gold production by as much as 50 per cent.
Oil prices clawed back some of the previous session’s steep drop that was triggered by China’s surprise interest rate hike as Beijing moved to cool a hot economy.
“Certainly China is trying to manage the economy,” said John Stephenson, portfolio manager at First Asset Funds.
“I believe that China’s economy is a command economy and it will be commanded to grow at a specific rate and I think the bureaucracy is very sophisticated and realize there is some enthusiasm, some irrational exuberance building up in some areas, and they’re trying to manage that.”
The November crude contract on the New York Mercantile Exchange gained $1.91 to US$81.40 a barrel following the release of a report that there was a smaller than expected increase in U.S. crude supplies. The Energy Information Administration said crude oil inventories were up 700,000 barrels, against an expected increase of 2.1 million barrels.
The energy sector was higher amid a disappointing earnings report from energy giant EnCana Corp., the first of the big Canadian resource companies to report quarterly results. Canada’s biggest natural gas producer reported that operating income, which excludes most one-time items, fell to $98 million or 13 cents a share, well below analyst estimates of 19 cents a share. Encana also reduced its natural gas production outlook for the rest of the year and said its cash flows would also be lower than earlier expectations. EnCana shares were down 32 cents at C$29.84.
Canadian Natural Resources (TSX: CNQ) declined 31 cents to $36.97.
Boeing says it earned US$837 million in the third quarter as it sold more commercial airplanes. The company also raised its profit guidance for the full year and its shares gained $1.60 to US$70.65.
Morgan Stanley recorded a loss in the third quarter because of special charges tied a loss on discontinued operations and the changing value of its own debt. Net loss applicable to common shareholders was US$91 million, or seven cents per share, compared with earnings of US$498 million, or 38 cents per share, in the same quarter last year. Morgan Stanley shares fell 95 cents to US$24.44.
Meanwhile, there are doubts that BHP Billiton will receive the necessary regulatory approvals from Ottawa in its US$38.6-billion hostile bid for PotashCorp. BHP offered a C$370-million, one-time payment into a proposed infrastructure fund to help cover the revenue the province would lose if the deal goes through. But an official with the Saskatchewan government said Tuesday the offer doesn’t come close to offsetting the potential loss.
BHP responded Wednesday that it hasn’t been deterred by Saskatchewan’s position and said it would continue to seek approval from Industry Minister Tony Clement, who oversees the foreign takeover process. PotashCorp shares lost $2 to C$146.40.
New York markets were also higher with the Dow Jones industrial average ahead 119.7 points at 11,098.3.
The Nasdaq composite index advanced 23.36 points to 2,460.31 with Yahoo shares ahead 68 cents to US$16.17 despite reporting after the close Tuesday that it missed sales forecasts. The Internet firm delivered tepid third-quarter revenue growth and forecast weaker than expected sales in the fourth quarter as it continues to lose market share to rivals like Google.
The S&P 500 index was 11.65 points higher at 1,177.55.
Traders will get more insight into the U.S. economy later Wednesday when the Federal Reserve issues its beige book report, which breaks down the health of the economy by region.
In other corporate news, WestJet Airlines Ltd. has landed a long-coveted partnership with a U.S. carrier, announcing late Tuesday it had inked an interline pact with American Airlines. The deal will see the two airlines collaborate on baggage handling and other tasks, allowing U.S. travellers to visit Canada more seamlessly. Its shares were up 39 cents to $12.25.
Shares in Roctest Ltd. (TSX: RTT), a Quebec-based manufacturer of high-precision sensors, soared 114 per cent to $3.96 after it received a friendly takeover offer that values the company at about $22.3 million, more than double its recent market price. The offer from Nova Metrix LLC has the support of Roctest’s principal shareholder, board and management.
In Asia, Japan’s benchmark Nikkei 225 stock index closed down 1.7 per cent and Hong Kong’s Hang Seng index slid 0.9 per cent.
London’s FTSE 100 index gained 0.33 per cent, Frankfurt’s DAX was ahead 0.49 per cent, while the Paris CAC 40 advanced 0.4 per cent.
Posts
