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Inflation buoys Toronto markets
Apr. 23, 2010 (Baystreet.ca) --
The Toronto stock market moved into solidly positive territory Friday afternoon amid news that inflationary pressures eased considerably last month while retail sales continued to climb. The S&P/TSX Composite Index surged 78.77 points to end the day at 12,239.64, a gain of 168.98 points, or 1.4% on the week. In economic news, Statistics Canada said the country's annual inflation rate slowed to 1.4% in March from 1.6% the previous month. The agency noted that gasoline prices exerted the most upward pressure on the all-items consumer price for a fifth straight month. The Bank of Canada said earlier this week that it could raise its key lending rate as early as June 1 to offset a rapidly improving economy and the potential for inflation that carries with it. Speculation that the central bank could raise its rate by as much as half a percentage point put pressure on markets earlier this week. However, today's inflation report pretty much negates that possibility, according to some experts. In another report released today, the agency said retail sales in Canada were up 0.5% in February from the previous month, following January's 0.9% increase. Excluding auto, retail trade slipped 0.1% on a monthly basis compared to the consensus forecast of 0.8% increase. The Toronto energy sector gained ground, while shares in Suncor Energy Inc. added 67 cents at $34.53. The gold sector jumped while Barrick Gold Corp. shares gained 23 cents to $40.41. The base metals sector added strength as the May copper contract on the Nymex gained 2.65 cents U.S. to $3.51 U.S. per pound. Shares in Teck Resources Ltd. fell 22 cents to $43.76 after gaining more than 5% Thursday following an announcement that the company will reinstate its dividend. The financial sector was flat as the G20 finance ministers met to discuss a hotly debated proposal for a global bank tax. Shares in Toronto-Dominion Bank slipped 16 cents to $76.80. In Canadian corporate news, shares in Cipher Pharmaceuticals Inc. gained 20 cents or 16% to $1.45 after the Toronto-area company said it narrowed its first-quarter loss and increased revenue due to higher prescription sales of Lipofen, which is used to treat a cholesterol disorder. The U.S. parent of Sears Canada Inc. said Friday it's moving to increase its stake in the Canadian department store chain above 90%, a threshold that would allow for a forced privatization of the national retailer. Shares in Sears Canada lost 52 cents or 1.8% to $29.00. And transportation and logistics firm TransForce Inc. credited cost containment and increased efficiency for a sharp improvement in first-quarter earnings to $26.6 million. Shares in TransForce added 10 cents to $10.27. The Canadian dollar jumped 0.30 cents to end the week above parity with the American dollar, at $1.00035 ON BAYSTREET All 14 TSX subgroups were in positive territory. Gold led the way, climbing 1.6%, while energy issues triumphed 1.5%, and materials gained 1%. The TSX Venture Exchange garnered 18.87 points to 1670.92, or just more than four points on the week (0.2%) while the Nasdaq Canada index was off 2.49 points to 790.07. ON WALLSTREET In New York, stocks rallied late in the session Friday, with the Dow, Nasdaq and S&P 500 all touching fresh 2010 highs, on a surge in commodities, improved earnings from American Express and strength in drugmakers. The Dow Jones industrial average ended the day up 69.99 points to 11,204.28, a hike of 185.62 points on the week, or 1.7%. It's the highest the big board has been since Sept. 19, 2008. The S&P 500 index gained 8.61 points on the day, 25.15 on the week to 1,217.28. The broader index improved 2.1% since last Friday, to a peak it too has not seen since Sept. 19, 2008. The Nasdaq composite index climbed 11.08 points to 2,530.15. That's a gain of 48.89 points, or 2% in the last five trading days. The Nasdaq is now at its highest since June 5, 2008. Stocks seesawed through the morning as investors considered a variety of economic, corporate and geopolitical news. But the tone turned positive by the close, with the Dow and S&P 500 pushing for fresh 18-month highs and the Nasdaq on track to close at a new 22-month high. A surprisingly weak durable goods orders report raised worries about the economy that were later tempered by a strong new home sales report. The dollar fluctuated, putting some pressure on corresponding commodity prices and stocks. Investors also sorted through the ramifications of Greece's decision to access emergency funds. Better-than-expected earnings from American Express, Microsoft and others were also in the mix. Worries about the nation defaulting on its debt eased Friday after Greece's prime minister requested up to $53 billion in aid from the European Union and International Monetary Fund. Greece's bond yields had hit record highs Friday before the debt-plagued nation asked to access the loans made available to it earlier this month. The European Union (E.U.) pledged to provide as much as $40 billion U.S. at a 5% interest rate, well below market rate. The IMF said it would lend Greece $13 billion U.S. Worries that Greece wouldn't make its May 19 deadline for refinancing more than $11 billion U.S. were exacerbated Thursday after ratings agency Moody's cut its bond rating on the country. An EU report showed that Greece's budget deficit last year was worse than the nation has admitted, adding to the worries. Roughly 83% of S&P 500 company earnings have topped estimates, with growth currently forecast to have risen 50% from a year earlier, according to the latest from Thomson Reuters. Revenue growth is expected to have risen 11% from a year ago. American Express reported higher quarterly earnings late Thursday that topped estimates. The Dow component also said its customers spent more in the first quarter than a year earlier and that it set aside less money for loan losses. Shares gained 2% Friday. Fellow credit card distributor Capital One Financial also posted earnings that improved from a year earlier and topped estimates, and also set aside less for loan losses than in previous quarters. However, the company said customer loan demand is still weak. Shares gained 2.5%. Microsoft posted a higher quarterly profit that surpassed forecasts late Thursday. The results were due to a continued strong response to it Windows 7 operating system, introduced six months ago, as well as its Bing search engine. Shares fell 2% Friday. Also after the close Thursday, Amazon.com reported earnings that jumped 68% from a year ago, surpassing forecasts, on higher sales that also beat expectations. Amazon shares fell 4.5%. Merck rallied 5% and was one of the Dow's biggest gainers after it forecast charges related to health-care reform that are lower than its rivals. Merck expects to take around $170 million U.S. in charges this year and between $300 million and $350 million U.S. in charges next year. Economically speaking, the government said orders for durable goods fell 1.3% in March. Economists surveyed by Briefing.com had expected orders for long-lasting manufactured goods, such as refrigerators and airplane parts, rose 0.1% last month. In February, durable goods orders rose 1.1%. A separate report showed new home sales rose to a 411,000-unit annual rate in March from a 324,000-unit annual rate in February. Economists expected sales of 330,000. Treasury prices lost ground, raising the yield on the 10-year note to 3.82%, from Thursday's 3.77%. Treasury prices and yields move in opposite directions. The price of a barrel of oil leaped $1.38 at $85.08 U.S. Gold prices jumped $14 to $1,157 U.S. an ounce.