Indexes march forward

Mar. 31, 2009 (Baystreet.ca) --

12:26 pm EST North American stock markets were positive Tuesday on the last day of first-quarter trading, as investors took in data showing yet another month of economic contraction in Canada and a disappointing reading on American consumer confidence.

The S&P/TSX Composite Index gained 127.29 points by noon to 8,723.51, clawing back a chunk of Monday's 225-point tumble.

Since falling to multi-year lows March 9, the TSX's main index is still up about 14% while the Dow industrial average has risen about 15%. However, it has been a miserable first quarter on stock markets.

Toronto is still under water by about 3.5% year to date while the Dow is down about 13%.

But the news on the economic front is somewhat distressing. Statistics Canada said gross domestic product declined 0.7% during January, on top of a 1% drop in December and a 0.7% slide in November.

The January decline matched expectations "but in what should end up being the country's darkest hour, GDP has dropped at an annualized 9% rate since October," said Avery Shenfeld, chief economist at CIBC World Markets.

"A few more months like that and we would be talking about a depression, but there are reasons to believe that milder monthly retreats lie ahead."

Other data from Statistics Canada showed that the Industrial Product Price Index rose 0.4% in February compared with January. It attributed the modest increase to both the depreciation of the Canadian dollar against its U.S. counterpart and increases in the prices for precious metals and petroleum products.

Sun Life Financial Inc.'s negotiations to buy parts of Hartford Financial Services Group Inc. are "currently off," the Globe and Mail reported, citing unidentified people familiar with the talks.

Sun Life President Jon Boscia told investors recently that Canada's third-largest insurer won't take any "gambles" that could compromise current capital levels, the newspaper said.

Canaccord Capital Inc., Canada's largest independent brokerage by assets, plans to fire about 75 brokers - or about 20% of its broker roster - as part of a cost-cutting plan announced last month.

The TSX financial sector was up as Bank of Montreal improved $1.32 to $32.87 and Manulife Financial headed 39 cents higher to $14.11.

The base metals sector climbed as Teck Cominco Ltd. rose 28 cents to $7.15 and First Quantum Minerals climbed $2 to $35.50.

The TSX energy sector was up as crude oil prices added to yesterday's tumble of almost $4.

Canadian Oil Sands Trust gained $1.65 to $24.79 and Canadian Natural Resources advanced 66 cents to $49.42.

The gold sector was down, as Goldcorp Inc. faded 79 cents to $41.71.

Air Canada shares descended 19 cents or 16.5% to 96 cents as fears rose that Canada's biggest air carrier may be preparing to file for bankruptcy protection from creditors for the second time in six years.

On Monday, the carrier announced that Montie Brewer has resigned as chief executive and named Calin Rovinescu, a former Air Canada executive who played a key role in the airline's court-supervised restructuring, as his replacement.

The Canadian dollar was up 0.37 cents to 79.60 cents U.S.

ON BAYSTREET

Of the 13 TSX subgroups, 10 were to the upside at noon time, led by metals and mining, up 3.8%. Financials were next at 2.6%, and energy stocks, 2% to the good.

The three laggards were telecoms, off 0.9%, consumer staples, down 0.4%, and information technology, down 0.3%.

The TSX Venture Exchange advanced 4.34 points to 949.54 while the Nasdaq Canada Index tacked on 4.45 points to 451.36

ON WALLSTREET

The Dow Jones Industrials average steadily gained ground as the morning wore on, and found itself 110.47 points higher by the midway point of the session to 7,632.49

The S&P 500 index advanced 11.53 points to 799.06, while the Nasdaq gained 26.23 points to 1,528.03.

Morning gains were broad-based, with 26 of 30 Dow stocks rising, led by Bank of America, Citigroup, JPMorgan Chase, Microsoft and Alcoa.

Economically speaking, there was more grim news from the American housing sector as Standard & Poor's/Case-Shiller 20-city housing index tumbled by a record 19% in January from a year earlier. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4%, also a new record.

The Conference Board said its Consumer Confidence Index rose following three consecutive monthly drops, to 26, from a revised 25.3 reading in February, which was itself a big drop from the 37.4 level in January. However, that missed an expected reading of 28.

The Chicago PMI slipped to 31.4 in March from 34.2 in February, missing forecasts for a slight improvement to 34.3.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.68% from 2.71% Monday. Treasury prices and yields move in opposite directions.

The May crude contract on the New York Mercantile Exchange slipped 38 cents to $48.03 U.S. a barrel.

The June bullion contract on the New York Mercantile Exchange was up $2 to $919.70 U.S. an ounce.