GB: TSX moves higher on commodities bounce, despite disappointing U.S. housing data
TORONTO - The Toronto Stock Exchange pushed higher Friday morning as commodity prices bounced back, overshadowing a disappointing report about U.S. new home sales that sent New York markets into a retreat.
The S&P/TSX was up 59.99 points to 12,421.8. About half of the sectors were in positive territory, with the influential materials index leading the way.
The Canadian dollar fell below parity, shedding 0.25 of a cent to 99.78 cents US.
Traders took in data from Statistics Canada that found gasoline and food continued to push up inflation in February to 2.6 per cent, the second consecutive monthly increase.
Core inflation — the underlying pressure on consumer prices excluding volatile items such as energy and fresh foods — rose two notches to 2.3 per cent, above the Bank of Canada's two per cent target line.
That's the fastest pace of price increases since 2008, said Emanuella Enenajor of CIBC World Markets.
"It seems there’s no solace for consumers from high prices at the pump. An increase in the cost of gasoline in February was yet again a contributor to the month’s near-consensus 0.1 per cent gain," she said.
"The rise in the ex-volatile rate could prove temporary, so the Bank of Canada will likely look through today’s elevated reading — suggesting limited policy implications."
Gas prices have been high as crude has hovered between US$105 and US$110 a barrel for the last month, up from $75 in October, amid worries that a military strike by Israel or the U.S. on Iran's nuclear facilities could disrupt global supplies.
Some analysts fear that if oil prices rise too much they could slow economic growth and consumer spending because drivers would have less disposable cash to spend elsewhere.
May oil was up $1.49 to US$106.84 a barrel on the New York Mercantile Exchange. The energy sector was up 0.8 per cent with shares in Canadian Natural Resources (TSX:CNQ) falling 16 cents to C$33.64.
Meanwhile, Pengrowth Energy Corp (TSX:PGF) plans to take over NAL Energy Corp. (TSX:NAE) in stock-swap deal that values NAL at some $1.9 billion, including debt. Based on Thursday's closing prices of $9.95 for Pengrowth stock and $7.80 for NAL shares, the offer represents a premium of 9.7 per cent. Shares in Pengrowth fell two per cent or 20 cents to $9.75, while shares in NAL rose 6.4 per cent or 50 cents to $8.30.
Gold bullion was up US$16.60 to US$1,659.10 an ounce. On the TSX, the gold-heavy materials index rose 1.2 per cent with shares in Barrick Gold Corp. (TSX:ABX) up 88 cents to C$43.91.
Copper prices added a cent to US$3.78. The mining sector added 1.5 per cent with shares in Teck Resources (TSX:TCK.B) up 11 cents at C$35.16.
Wall Street moved lower as traders weigh the prospects of a global economic slowdown even as several U.S. companies report strong earnings. Losses accelerated after the release of data that showed new home sales fell for a third straight month in February.
Companies from a wide range of sectors— Nike, Oracle, Tiffany and Discover Financial — have reported stellar earnings this week. However, the strength comes tinged with worry for these companies, which rely on strong sales in Asia and Europe. Reports in China and Europe earlier in the week pointed to a likely slowdown in those economies.
The Dow Jones industrial average was down 23.9 points to 13,022.2, the Nasdaq down 13.5 points to 3,049.8 and the broader S&P 500 index slipped 3.6 points to 1,389.2.
The U.S. Commerce Department said new home sales fell 1.6 per cent last month to a seasonally adjusted annual rate of 313,000 homes. Sales have fallen nearly seven per cent since December. But prices surged to their highest level in eight months, suggesting builders anticipate more demand in the months ahead.
"U.S. new home sales surprisingly fell 1.6 per cent in February to a 313K rate, against consensus expectations for a 1.3 per cent increase," said Andrew Grantham of CIBC World Markets.
"Still, upward trends in housing starts and building permits recently suggest a degree of confidence among builders that the gradual uptrend in new home sales will re-emerge as the year wears on."
The National Association of Realtors on Wednesday released a mixed report about the state of the U.S. housing market. Sales of previously occupied homes dipped last month, but the sales pace for the winter was the best in five years.
Housing has been dragging on the economic recovery. An oversupply of homes has weakened construction and other trades in many parts of the United States.
Britain's FTSE 100 was down 0.25 per cent. Germany's DAX shed 0.4 per cent and France's CAC-40 fell 1.1 per cent.
In Asia, stocks were jolted for a second day in a row by an index, released Thursday, that showed renewed weakness in China's manufacturing. The gauge compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is shrinking.
That data comes on top of trade figures showing both Chinese and global demand falling. Weak European economic indicators added to worries about a slowdown.
Japan's Nikkei 225 index dropped 1.1 per cent to close at 10,011.47 as the country's formidable export sector faded amid fears of slowing overseas demand. Yamaha Motor Co. shed 3.1 per cent and Sharp Corp. slid 3.3 per cent.
