Telecoms help boost TSX amid positive U.S. data
Published Tuesday, March 26, 2013 8:25AM EDT
Last Updated Tuesday, March 26, 2013 4:41PM EDT
TORONTO -- The Toronto stock market registered a modest gain Tuesday as positive U.S. housing and durable goods data further persuaded traders the American economic recovery remains on track and pushed aside concerns about the Cyprus banking crisis.
The S&P/TSX composite index rose 25.67 points to 12,706.38, amid gains in telecom and consumer stocks and further declines in the materials sector. The TSX Venture Exchange declined 7.32 points to 1,096.03. The Canadian dollar was up 0.47 of a cent to 98.39 cents US.
U.S. indexes ran up sharply as the U.S. Case/Schiller home price index rose by slightly more than one per cent in January, higher than the 0.6 per cent gain that had been expected.
However, sales of new homes dropped to a seasonally adjusted annual rate of 411,000 in February, a decline of 4.6 per cent from the January level of 431,000. Economists had looked for an annualized reading of 437,000 for February.
The decline in February still left sales 12.3 per cent higher than a year ago.
Elsewhere, another report showed that U.S. durable goods orders rose by 5.7 per cent in February, much higher than the 3.8 per cent reading that economists had expected.
There was one dark cloud amid the data: U.S. consumer confidence fell in March amid economic angst and government spending cuts. The Conference Board's March confidence index fell to 59.7 from a revised reading of 68 in February. That's also below the 68.7 reading that analysts polled by research firm FactSet had expected.
The Dow Jones industrials jumped 111.9 points to a record-high close of 14,559.65. The Nasdaq was up 17.18 points at 3,252.48 while the S&P 500 index came within two points of a record close, up 12.08 points to 1,563.77.
Telecoms led advancers, up one per cent as BCE Inc. (TSX:BCE) advanced 81 cents to $47.31.
Consumer discretion stocks also helped lift the TSX as auto parts maker Magna International (TSX:MG) advanced $1.24 to $58.80.
The energy sector turned around late in the session, rising 0.29 per cent as the May crude contract on the New York Mercantile Exchange gained $1.53 to US$96.34 a barrel. Talisman Energy (TSX:TLM) moved up 18 cents to C$12.33.
Inter Pipeline Fund (TSX:IPL.UN) has reached binding long-term commitments for an expanded oilsands pipeline system that it plans to build for about $2.6 billion. The company says it will build 840 kilometres of new pipeline and seven new pump stations to serve three oilsands operations owned by the FCCL Partnership, a partnership between Cenovus Energy (TSX:CVE) and ConocoPhillips (NYSE:COP). Its units dipped four cents to $23.57.
The financial sector was ahead 0.27 per cent as the Office of the Superintendent of Financial Institutions has identified Canada's six largest banks as systemically important to the country. And as a result, Bank of Montreal (TSX:BMO), Bank of Nova Scotia (TSX:BNS), Canadian Imperial Bank of Commerce (TSX:CM), National Bank of Canada (TSX:NA), Royal Bank of Canada (TSX:RY) and Toronto-Dominion Bank (TSX:TD) will be subject to enhanced disclosure and an additional one per cent capital buffer for risk a one per cent risk-weighted capital surcharge by Jan. 1, 2016. Share performance was split with RBC, BMO, TD and Scotiabank positive while the other two banks were lower.
The TSX gold sector lost about one per cent as April bullion declined $8.80 to US$1,595.70 an ounce. Barrick Gold Corp. (TSX:ABX) faded cents to C$ .
The base metals sector closed well off the lowest levels of the session, down 0.06 per cent as May copper lost early gains and closed unchanged at US$3.44 a pound. Sherritt International (TSX:S) shed nine cents to C$5.
The declines in mining stocks carried on a pattern that has been going on for months, reflecting tepid emerging market economies and weak commodity prices.
"We've seen a pattern here for a couple of years where the U.S. markets have outperformed the Canadian market," said Garey Aitken, chief investment officer at Bissett Investment Management.
"I think that for the same reason that for so many years during the cyclical upswing, the Canadian market outperformed (the U.S.), the cyclical in the Canadian marketplace and that leverage to growth in emerging markets is holding the TSX back."
Traders kept an eye on Cyprus as the country's banks are all scheduled to stay closed until Thursday. Until the late Monday night decision, all but the Bank of Cyprus and Laiki had been due to reopen on Tuesday.
No reason has been given for continuing the closure, now in its second week, but fears of a bank run are thought to have played a role in the decision.
There had been initial relief Monday after Cyprus secured a (euro)10-billion bailout loan. The country also had to come up with almost (euro)6 billion on its own and it is doing this by slashing its oversized banking sector and inflicting hefty losses on large depositors in troubled banks.
But that relief turned to uncertainty after Jeroen Dijsselbloem, who chairs the meetings of the finance ministers of the 17 European Union countries that use the euro, said the Cyprus bailout was a template.
He later attempted to retract his comments and described Cyprus as a "specific case with exceptional challenges."
But he left the impression that those with bank deposits above the uninsured level of (euro)100,000 may be tapped in any future bailout.
"The initial (and brief) optimism surrounding the deal was met with the cold reality of the question "where do we go from here?" said BMO Capital Markets senior economist Carl Campus.
"Ratings agencies and investors alike are on high alert."