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May 12, 2010 (Baystreet.ca) --
The Toronto stock market racked up a solid gain Wednesday as investors set aside concerns about growing European debt problems and sent stocks higher across all sectors.
The S&P/TSX composite index sailed ahead 195.47 points -- or 1.6% -- to end the day at 12,196.08
Markets have risen the past two days since the European Union announced an aggressive $1-trillion U.S. plan to stop Greek debt problems from spreading across Europe, which could derail a global economic recovery and possibly destroy the euro.
Investors were encouraged by data showing that Germany's economy, Europe's largest, grew by a better-than-expected 0.2% in the first quarter as a global recovery boosted demand for its high-value exports.
And the news that Spain aims to cut its budget deficit by a further 1.5 percentage points to 6% of the country's gross domestic product in 2012 has also helped calm jittery markets.
Spanish Prime Minister Jose Luis Rodriguez Zapatero outlined a raft of measures including cuts in public sector pay.
But some doubts remain about the E.U. rescue package, as shown by gold prices that went further into record territory Wednesday.
Eldorado Gold Corp. announced it is buying Brazauro Resources Corp. for $122.4 million in a share-swap deal. Brazauro owns the Tocantinzinho gold project in Brazil. Its shares jumped 60 cents or 87% to $1.29 while Eldorado shares moved up 15 cents to $18.19.
All TSX sectors were higher, with gains led by the tech sector, which was up ahead of earnings after the close from networking and data centre giant Cisco Systems. Celestica Inc. was ahead 48 cents at $10.10 while CGI Group gained 65 cents to $16.40.
Transportation stocks pushed the industrials sector up almost two per cent as Canadian National Railways was $1.72 higher at $62.42, while Bombardier Inc. advanced 19 cents to $5.44.
The financials sector was ahead, as Bank of Montreal was up $1.31 at $61.65 and CIBC was $1.47 higher at $73.95.
Power Financial Corp. a Montreal-based holding company that owns Great West Lifeco, Investors Group and other major companies, reported its first-quarter net profits doubled to $389 million on a sharp jump in revenues. Its shares were up 14 cents at $29.52.
The base metal sector advanced as the May copper contract on the Nymex edged three cents lower to $3.18 U.S. a pound. FNX Mining improved by 26 cents to $12.02 while First Quantum gained $3.04 to $73.05.
The energy sector gained, as Suncor Energy was up 92 cents at $32.86 and Imperial Oil gained 91 cents to $42.51.
In other corporate news, a "very active" housing market helped hardware and renovation supply retailer Rona Inc. post a $3-million profit in the latest quarter, reversing a loss in the same period a year earlier of $2.5 million. Sales increased 12.5% to $951.4 million, same-store sales were up 10.8% and its shares gained six cents to $16.95.
Talisman Energy Inc. shares were up 80 cents at $18.39 after the company said Wednesday it will be able to reduce capital spending next year and still boost overall production by five to 10%, thanks largely to its strategic shift into unconventional shale gas plays in North America.
Quebecor Inc. says higher revenues in its telecommunications segment in the first quarter offset declines in most other parts of its business, particularly news media. Revenue was $948.1 million, up $45 million overall from the same time last year.
Quebecor says it had $38.3 million of net income in the first quarter, before adjustments. That's down from $57.7 million from the same time last year. Its shares were ahead 78 cents at $37.29.
Magellan Aerospace Corp. shares surged 67 cents or 30.3% to $2.88 after it said it has struck a deal with jet engine maker Rolls-Royce Plc and its German unit to manufacture mainline shafts and stub shafts for various Rolls-Royce engines. The work is expected to generate about $425 million U.S. for the Canadian company over the 15-year term of the agreement.
In economic news, Statistics Canada said the country's merchandise exports declined 0.7% in March, mainly due to a fall in energy prices and imports grew 2.0%. Trade surplus with the world narrowed to $254 million in March from $1.2 billion in February.
In another report the agency said the New Housing Price Index (NHPI) rose 0.3% in March, following a 0.1% increase in February. Canadian new home prices rose for an eighth straight month in March, suggesting the recovery in the housing market remains on solid footing.
The Canadian dollar moved up 0.16 cents to 98.10 cents U.S.
ON BAYSTREET
All 14 TSX subgroups gained on the day. Information technology had the biggest boost at 2.9%, followed by industrials, ahead 2.7%, while metals and mining stocks advanced 2.6%.
The TSX Venture Exchange surged 13.15 points to 1,625.73, while the Nasdaq Canada index moved 10.20 points higher to 763.12.
ON WALLSTREET
In New York, equities advanced Wednesday as European debt noise faded and investors focused on an improving domestic economy and corporate earnings.
The Dow Jones industrial average vaulted 148.65 points, or 1.4%, to close at 10,896.91.
The S&P 500 index picked up 15.88 points to 1,171.67. The Nasdaq composite index charged ahead 49.71 points – more than 2% -- to 2,425.02
Shares of Intel, IBM and Cisco Systems, which was due to report quarterly earnings after the close, were all up about 3%. Manufacturers Boeing, Caterpillar and Du Pont were also up more than 2%.
The CBOE Volatility index, or the VIX, Wall Street's fear gauge, dipped more than 9%. Last week, the measure had shot up to 13-month highs as investors remained nervous about the sovereign debt crisis.
U.S. federal prosecutors are looking into whether Morgan Stanley misled investors about complex mortgage derivatives it designed, according to the Wall Street Journal. The company, however, denies any knowledge of the investigation. Shares of the bank were down more than 3%.
After the closing bell, Cisco Systems was expected to post quarterly earnings of 39 cents U.S. per share, up 29% from a year earlier. Analysts are looking for the network equipment maker's revenue to climb 25% to $10.2 billion U.S.
Disney reported profit and revenue that beat analysts' expectations late Tuesday. Thanks to the success of "Alice in Wonderland," the media giant's profit surged 55% to $953 million U.S., or 48 cents U.S. per share, and sales climbed 6% to $8.58 billion U.S.. Stock in Disney was lower.
Economically speaking, the March trade balance, released before the start of trading, widened to $40.4 billion U.S. from $39.4 billion U.S. in February. That was higher than the $39.5 billion U.S. that analysts surveyed by Briefing.com expected.
The Treasury reported the 19th consecutive monthly deficit, with a shortfall of $82.7 billion U.S. in its April budget. That's much larger than the $52-billion U.S. gap economists were expecting during month, and it also topped March's $65.4-billion U.S. deficit (an earlier version of this story erroneous stated the March shortfall). Historically, the government's budget posts a surplus during the month thanks to the April 15 tax filing deadline.
Treasury prices inched down, raising the yield on the 10-year note to 3.57% from Tuesday's 3.54%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil eased 98 cents to $75.39 U.S.
Gold prices jumped $18 to $1,238 U.S. an ounce, another all-time record.