January 17, 2013
TORONTO—The Toronto stock market was slightly higher Thursday amid rising commodity prices and positive US economic data. The S&P/TSX composite index gained 50.46 points to 12,659.28 while the TSX Venture Exchange dipped 0.08 of a point to 1,230.12. The Canadian dollar was up 0.11 of a cent to 101.52 cents US.
US indexes rose as weekly applications for unemployment benefits hit a five-year low and US home construction surged last month. But the Dow industrial average was pressured by earnings disappointments in the banking sector and further Dreamliner woes for aircraft maker Boeing Inc. The blue chip index was up 65.09 points to 13,576.32.
The Nasdaq composite index gained 18.32 points to 3,127.81 and the S&P 500 index rose 6.57 points to 1,479.2. Builders broke ground on US houses and apartments at a seasonally adjusted annual rate of 954,000 in December, up 12.1 per cent from November. The report capped off the best year for US home construction since the real estate meltdown.
And weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000. That’s comparable to numbers seen just after the recession began. The weekly numbers are subject to a lot of seasonal volatility, but the overall trend suggests an improving landscape. Boeing shares lost another one per cent after American and European authorities grounded the company’s 787 Dreamliner, its newest and most technologically advanced airliner, until the risk of battery fires is resolved.
Japan’s two largest air carriers voluntarily grounded their 787s on Wednesday following an emergency landing by one of the planes in Japan. On the earnings front, Bank of America was dragged down by mortgage settlements in the fourth quarter, though it had already warned its shareholders of that. But it fell well short on revenue expectations and shares edged down 3.5 percent.
Citigroup registered a big earnings miss, with earnings per share of 69 cents ex-items against the 96 cents that analysts had expected and its shares were down 2.65 percent. In the resource sector, the chief executive of mining giant Rio Tinto PLC and another senior executive are stepping down after the company announced huge writedowns from its Alcan aluminum business and an acquisition of a coal company in Mozambique.
The company disclosed that it will take an impairment charge of approximately $14 billion in its 2012 results to be published on Feb. 14, including about $3 billion on the acquisition of Rio Tinto Coal Mozambique, and $10 billion or more on the value of Rio’s aluminum assets, primarily Alcan. Its shares were off 12 cents to US$54.90 in New York.
In other corporate developments, Sun Life Financial Inc and the Malaysian state investment company are teaming up to purchase 98 percent of a Malaysian life insurance company. Sun Life and Khazanah Nasional are purchasing the CIMB Aviva Assurance life insurance company as well as CIMB Aviva Takaful for a total shared cost of $586 million. Sun Life shares gained 31 cents to $28.25.
H&R Real Estate Investment Trust plans to acquire Primaris Retail REIT in a cash and stock deal valued at some $2.8 billion. Primaris owns 35 properties across Canada, including shopping centres in Alberta, Manitoba, Quebec and Ontario comprising some 14.7 million square feet. H&R units lost 70 cents to $23.09 while Primaris units added nine cents to $26.60.
Oil prices headed higher, building on Wednesday’s gain of almost $1 after the U.S. Energy Information Administration said crude supplies declined by one million barrels last week. Analysts polled by Platts expected a 2.5-million-barrel climb. The February crude contract gained $1.12 to US$95.36 a barrel and the energy gained 0.46 percent. Canadian Natural Resources advanced 19 cents to C$28.93.
Prices were also supported by an attack on a natural gas plant deep in the Sahara desert in Algeria. Islamist militants are holding dozens of hostages. The base metals sector was up 0.45 per cent as March copper on the New York Mercantile Exchange rose four cents to US$3.65 a pound. First Quantum Minerals (TSX:FM) rose 34 cents to C$21.25.
The tech sector gained 0.35 per cent with CGI Group ahead 31 cents to $24.47. Telecoms were generally higher with BCE Inc up 22 cents to $42.88. The gold sector was the major decliner as February bullion declined $4.30 to US$1,678.90 an ounce. Eldorado Gold Corp. (TSX:ELD) faded seven cents to C$12.65.
European bourses were higher as London’s FTSE 100 index rose 0.37 per cent, Frankfurt’s DAX was up 0.81 per cent while the Paris CAC 40 advanced 0.94 percent. Earlier in Asia, Japan’s Nikkei 225 index closed nearly 0.1 per cent, South Korea’s Kospi fell almost 0.2 per cent and Hong Kong’s Hang Seng slipped 0.1 per cent. Mainland China’s Shanghai Composite Index fell 1.1 per cent ahead of key economic data.
Traders are waiting for China’s growth data Friday to help assess the strength of the global economy. China will release fourth-quarter growth data for 2012 as well as overall GDP figures for the year.