TH: TSX opens higher after report shows economic growth unchanged
The Toronto stock market opened slightly higher Thursday as traders took in modestly positive Canadian economic growth data on the last day of trading this quarter.
The S&P/TSX composite index added 11.6 points to 13,200.6. The TSX Venture Exchange was up 5.5 points to 1,898.34.
The Canadian dollar moved 0.4 of a cent higher to 103.43 cents U.S. after Statistics Canada reported that real gross domestic product was unchanged in April as both the goods-producing and services sectors remained the same.
Economists had expected to see a 0.1 dip in economic growth, which would have marked the second decline in three months.
“Overall, better than expected, but obviously not a good reading in absolute terms and we expect May to show similar softness,” said CIBC chief economist Avery Shenfeld.
“A strong finish in June would put the economy on track for just over one per cent growth, too sluggish for the Bank of Canada to hike rates in July. Note that disruptions to manufacturing weighed on these results, suggesting better growth in Q3.”
The August crude contract was unchanged at $94.77 a barrel. Gold was down $1.90 to $1,508.50 per ounce after a big gain Wednesday. Copper added another three cents to $4.24 per pound.
Trading was expected to be somewhat more volatile on Thursday as it marks the end of the month and the end of the quarter, when investors often book profits and close off trades.
Wall Street opened solidly too. The Dow Jones industrial average was up 44.9 points at 12,306.3 and the Nasdaq gained 11.43 points to 2,751.92, while the broader Standard & Poor’s 500 index rose 3.45 points to 1,310.85.
Other Canadian data released Friday includes a Statistics Canada report that showed average weekly earnings of nonfarm payroll employees grew by 3.5 per cent compared to last April.
A survey by the Conference Board of Canada showed that consumer confidence fell for the second straight month in June, dropping 2.5 points to 83.1, largely due to increased uncertainty about future income and job prospects.
Thursday is also the last day of the U.S. Federal Reserve’s $600 billion monetary stimulus, which many have credited for the outperformance of stock markets over the past year or so. A speech by Fed official James Bullard will be monitored in that context.
Greece looked likely to clear a final hurdle on its way to a second round of bailout money.
The Greek Parliament’s backing of austerity measures Wednesday has helped solidify sentiment in the markets following weeks of unease. Greece’s lawmakers are poised to vote in favour of an implementation bill after Wednesday’s Parliamentary backing for a euro28 billion (US$40 billion) austerity bill.
Passage of both is necessary for Greece’s international creditors to release the euro12 billion worth of bailout funds from last year’s financial rescue. Without the money, Greece would have run out of money by the middle of July. A Greek debt default could have caused havoc in financial markets around the world.
In corporate news, SNC-Lavalin Group (TSX: SNC) has agreed to purchase the troubled Crown corporation, the Atomic Energy of Canada Ltd.’s nuclear reactor business for $15 million. Shares were up one per cent or 52 cents to $57.07.
Empire Company Ltd. (TSX: EMP.A) shares gained 1.5 per cent or 82 cents to $54.98 after it said it is raising its dividend 12.5 per cent to 22.5 cents per share from 20 cents. Fourth quarter net earnings rose to $92.3 million or $1.36 per share from $73.5 million or $1.07 per share in the comparable period a year earlier.
Valeant Pharmaceuticals International Inc. (TSX: VRX) said Thursday it will pay $76 million plus additional royalties to acquire the marketing rights to skin medications Elidel and Xerese for the U.S., Canada and Mexico markets. Shares added 17 cents to $51.18.
Eastern Platinum Ltd. (TSX: ELR) shares fell 4.8 per cent or four cents to 79 cents apiece after it said it will contest a proposed class-action lawsuit that alleges the company failed to disclose material changes to its Crocodile River Mine in South Africa.
In Europe, the FTSE 100 index of leading British shares was up 0.7 per cent, while France’s CAC-40 rose 0.4 per cent. Germany’s DAX was up 0.1 per cent.
