Metals, financials support TSX;lower oil helps send NY indexes up
May 15, 2008TORONTO - The Toronto stock market was back in record territory Thursday afternoon with most segments positive even as investors took in data which showed that a weakening U.S. economy is hurting manufacturers.
But the TSX was off the highs of the day as energy stocks backtracked following a sharp reversal in oil prices.
Lower oil prices helped boost New York markets as investors grappled with worries about factories and employment.
Toronto's S&P/TSX composite index jumped 117.08 points to 14,743.39. The index had breezed past its previous closing high of 14,625.76 from last July on Monday thanks to rising commodity stocks - a trend analysts expect to continue.
"Agriculture, the energy and metals are all going to be the places to be for this year," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.
"2003 through to 2006, we had four year period of double-digit returns, last year we were just shy of that when the TSX was up 9.8 per cent but today year to date, we're up seven per cent and I think we're on track to see double digit returns resume for the TSX index."
The TSX Venture Exchange added 5.06 to 2,572.74 while the Canadian dollar moved up 0.38 cent to 99.95 cents US after Statistics Canada said factory sales retreated 1.6 per cent to $49 billion in March, the first monthly decline of 2008. A sharp downturn in motor vehicle sales was the chief contributor but there were declines in 18 of the 21 industries tracked.
"Manufacturing remains by far and away the weak spot in the Canadian economic landscape," said BMO Nesbitt Burns economist Doug Porter.
"This is holding broader Canadian GDP growth to a pace no better than its U.S. counterpart."
On Wall Street, the Dow Jones industrial average edged up 53.49 points to 12,951.87.
The Nasdaq composite index added 24.42 points to 2,521.12 as the tech sector got lift from efforts by billionaire investor Carl Icahn to oust Yahoo Inc.'s board of directors "unconscionable" actions that led Microsoft Corp. to withdraw a $47.5-billion takeover bid.
The S&P 500 ticked 8.33 points higher to 1,416.99 as the U.S. Labour Department reported that applications for jobless benefits rose by 6,000 last week to 371,000, in line with expectations.
There were also dismal American manufacturing numbers. The Federal Reserve said industrial production dropped 0.7 per cent last month. Big cutbacks in auto production contributed to the decline, which was more than double what economists had expected.
In corporate news, General Electric Co. is reportedly planning to sell its appliance business. The Wall Street Journal says GE has hired Goldman Sachs to run an auction for the unit, said to be worth up to US$8 billion.
On the retailing front, J.C. Penney said a pullback in consumer spending cut its first-quarter profit in half, and predicted "difficult" conditions for the entire year.
The TSX energy sector declined 0.7 oil prices fell from the highs of the session, a move analysts attributed to the expiration of options and to a sharp drop in natural gas prices.
Contributing to the volatility, the June crude contract expires next week.
Natural gas prices tumbled after the U.S. Energy Department said inventories rose by 93 billion cubic feet last week, more than analysts had expected.
June natural gas futures fell 29.8 cents to $11.30 per 1,000 cubic feet.
The June crude contract fell 50 cents to US$123.72 a barrel on the New York Mercantile Exchange after earlier jumping as high as $126.64.
PetroCanada (TSX:PCA) was 86 cents lower to $55.40 while Nexen Inc. (TSX:NXY) gave back 33 cents to $38.37.
Gold prices headed up with the June bullion contract on the Nymex ahead $13.50 to US$880 an ounce, taking the gold sector in Toronto up 2.65 per cent as Barrick Gold Corp. (TSX:ABX) improved 89 cents to $38.85 and Kinross Gold Corp. (TSX:K) climbed 55 cents to $19.97.
The base metals sector was up one per cent. Equinox Minerals (TSX:EQN) was ahead 10 cents to $4.72 and Inmet Mining Corp. (TSX:IMN) rose $4.28 to $71.78.
Lundin Mining Corp. (TSX:LUN) shares rose 56 cents to $8.26 after its first-quarter profit rose 51 per cent to $78.8 million on higher copper and lead prices.
The financials sector was also supportive, up 1.3 per cent, as Scotiabank (TSX:BNS) climbed 99 cents to $49.74 and TD Bank (TSX:TD) improved $1.05 to $68.62.
Allen-Vanguard Corp. (TSX:VRS) shares were shot down 18 cents to $3.18 after the maker of protective gear and anti-roadside-bomb technology cut near-term expectations, citing delays in U.S. defence programs. The Ottawa-based company lost $34.2 million in its latest quarter, including expenses from recent acquisitions which boosted revenue to $91.3 million from $23.5 million.
Investment firm Sprott Inc. (TSX:SII) closed a $200-million initial public offering, and in its first day of trading, the shares were down 11 cents to $9.89.
