TSX adds as oil gains, RBC, RIM boost index
Toronto's main market advanced Thursday as oil gained ground on positive data in the US, while at home, investors were encouraged by RBC's (TSE:RY) quarterly results and an analyst upgrade on Research In Motion (TSE:RIM) (NASDAQ:RIMM).
Meanwhile, traders were also hoping that a deal would be reached to avert the so-called fiscal cliff, which refers to the $600 billion in tax hikes and spending cuts set to take effect next year.
On Thursday, U.S. stocks trimmed some of their gains as House Speaker John Boehner told a televised new conference that "no substantive progress" had been made in the talks to reach a budget deal.
Treasury Secretary Timothy Geithner and another senior White House aide visited Capitol Hill today separately for talks with congressional leaders on the issue.
Back in Toronto, as of 1:30pm ET, the S&P/TSX Composite Index rose 62.97 points, or 0.52%, to 12,203.30, while the more junior S&P/TSX Venture Index gained 6.62 points, or 0.55%, to 1,211.99.
Commodities were higher today, as gold for December delivery rose $10 to $1,728.8 an ounce, and silver futures gained 55 cents to $34.32 a barrel. Crude oil for January added $1.4 to $87.89 on fiscal cliff talks and positive GDP data in the US for the third quarter.
The base metal copper contract gained 6.4 cents to $3.6 a pound.
All of Toronto's main sectors were in positive territory, with the biggest gains seen in info tech, metals and mining, energy and financials.
Teck Resources (TSE:TCK.B) gained 2.6%.
Materials were up only slightly, with gains in the sector led by Inmet Mining (TSE:IMN), up 4.3% after the company rejected First Quantum Minerals (TSE:FM) takeover proposal put forward earlier this month. First Quantum lost 0.9% as it said it was both "surprised and disappointed" by the outcome.
Gains on Toronto's main index were supported largely by info tech, which was lifted by RIM, as the BlackBerry maker's shares rose over 7%. Thursday, Goldman Sachs (NYSE:GS) upgraded the smartphone company to "buy" from "neutral", and lifted its 12-month price target on the Waterloo-based company to $16 a share, from $9 a share previously.
Meanwhile, financials also added, after the Royal Bank of Canada, the nation's largest bank by assets, started the reporting season for Canada's banks off an upbeat note.
The bank Thursday said fourth-quarter earnings rose 22 per cent on a sharp jump in fixed income trading revenue and steady loan growth. For the quarter that ended October 31, RBC earned $1.9 billion, or $1.25 per share, compared with a year-earlier profit of $1.6 billion, or $1.02 per share. Excluding items, the Canadian bank earned $1.27 per share, which was just ahead of the analysts' average estimate of $1.26 per share, according to Thomson Reuters.
Energy gains were sharp, with gainers led by Precision Drilling (TSE:PD), up 4.3%. Canadian Natural Resources (TSE:CNQ) advanced 1.7%, Suncor Energy (TSE:SU) rose 0.6% and Encana Corp (TSE:ECA) was higher by 0.4%.
In corporate news, clothing maker Gildan Activewear (TSE:GIL) rose 2.7% after it posted an 84% rise in fourth quarter profit, helped by higher printwear sales volumes, prompting an increase in its quarterly dividend by 20%. The company, the best-performing stock on the S&P/TSX Composite index so far this year, missed fourth quarter forecasts, but raised its first quarter and full year guidance.
Century Iron Mines Corp (TSE:FER) and Wisco International, a unit of Wuhan Iron & Steel, also known as China's third-largest steel producer, have completed the formation of their joint venture for Century's Sunny Lake iron ore property in Quebec, as per an agreement signed in December of last year.
On the economic front, Statistics Canada said the raw materials price index was unchanged in October, while the industrial products price index fell 0.1% last month over September due to lower prices of petroleum and coal products.
U.S. stocks were still in positive territory Thursday afternoon, but trimmed some of its gains after Boehner spoke about budget talks.
The Dow lately was up 45 points to 13,030, the Nasdaq rose 19 points to 3,011, and the S&P 500 was higher by 7 points to 1,417.
Investors were largely focused on developments over the budget talks, and seemed to brush off economic reports, which saw higher GDP growth than initially forecast.
On the corporate front, the retail sector was in focus today, as a number of chains reported their monthly sales results, with the Thanksgiving weekend not able to help several retailers recover from the Hurricane Sandy fallout.
According to the National Retail Federation, total spending increased 12.8 per cent to $59.1 billion over the long Thanksgiving weekend. But Cyber Monday, the Monday after Thanksgiving this year that fell on November 26 and was reportedly the biggest online shopping day yet, is not included in retailers' reports for November, as most chains reported sales through Saturday, November 24.
Macy's, which opened at midnight on Black Friday, reported comparable sales were down 0.7 per cent in November, blaming the disruption of Hurricane Sandy, despite the largest volume Thanksgiving weekend in the company's history. Analysts expected a 2.5 per cent increase.
Rival Kohl’s Corp (NYSE:KSS) was no better, as the department store chain said same store sales declined 5.6 per cent from a year ago, below its expectations. All regions reported negative sales for November, with the Mid-Atlantic and Northeast the most challenging due to Sandy.
No.2 discount chain in the US Target Corp, which opened its doors at 9pm on Thanksgiving night, said November comparable sales decreased 1 per cent, below its own expectations and reflecting weaker-than-planned sales in the first two weeks. But it said profitability for the month remained on plan, and is confident for the holiday season, with stronger sales growth across all channels in late November.
Gap (NYSE:GPS) posted November comparable sales rose 3 per cent, compared with a 5 per cent decline in the same month a year ago, but still fell short of Street estimates for a rise of 3.8 per cent.
Some retailers beat expectations, however, including Limited Brands (NYSE:LTD), which reported same store sales growth of 5 per cent for the four week period ending November 24, above analyst estimates for a 3.1 per cent rise.
Grocery store operator Kroger Co. (NYSE:KR) Thursday posted a 62 per cent hike in third-quarter profits as stronger revenue was helped by a one-time settlement gain. Shares advanced almost 4% Thursday.
Walt Disney Co. (NYSE:DIS) shares also climbed after the Dow component hiked its dividend.
On the economic slate, the Commerce Department said the U.S. economy expanded more than initially projected in the third quarter, rising 2.7%, up from an initial estimate of 2%, but just under estimates that forecast a 2.8% rise. The number also compared with a second quarter rate of 1.3%.
The Labor Department said claims for unemployment benefits declined by 23,000 to 393,000 last week. The consensus was for 390,000 claims. The department said there is no indication that states are carrying extra claims from Hurricane Sandy.
The National Association of Realtors also said pending home sales rose 5.2% in October. The consensus estimate was for a 1% rise. Though the hurricane's effect on Northeast sales during November is still a question, today's report points convincingly to building momentum for existing home sales.
European markets finished broadly higher today with shares in France leading the region. The CAC 40 rose 1.53% while Britain's FTSE 100 gained 1.15% and Germany's DAX rose 0.78%.