PR: TSX gains on higher commodity prices, Scotiabank rallies
Toronto’s main market was higher Tuesday on potential stimulus in China, rising commodity prices and better-than-expected earnings reports from Scotiabank (TSE:BNS).
Worries over the Spanish banking sector kept market gains moderate, as yields on Spanish government debt rose higher after reports that the country’s fourth-largest lender needs C$19 billion in state aid to steady itself.
The yield on Spanish 10-year bonds rose Tuesday to 6.5 per cent, and the spread between Spanish and German bonds daunted investors at 5.14 percentage points. Yields of 7% have prompted international bailouts for Greece, Ireland and Portugal.
Concern that the Spanish government will suffer from the cost of saving the country’s banking sector has soured investors, as the country is already under pressure to lower its debts at a time of recession and record-high unemployment.
Back in Toronto, the S&P/TSX Composite Index gained 25.66 points to 11,591.81, while the more junior S&P/TSX Venture Composite Index edged down 8.12 points to 1,316.89, as at 12:30 pm EDT.
Materials, energy and financials all enjoyed slight gains in the early afternoon, up 0.95%, 1.96% and 0.73%, respectively.
Media reports that China will relax monetary policy and announce fiscal stimulus measures to offset slowing economic growth sent commodities higher Tuesday.
Commodity prices and resource stocks on the TSX are driven by China’s large demand for oil and metals, but prices for crude and copper have been hurt over the last couple of months on worries the global economic recovery is losing momentum.
On Tuesday, gold for August delivery rose $7.50, to $1,578.70 an ounce, while oil for July delivery was up $1.25 to $92.11 a barrel. Silver futures were up 0.47% to $28.52 an ounce, while the base metal copper contract gained 1.44% to $3.50 a pound.
In energy, Talisman Energy (TSE:TLM) was up 4.00% on Tuesday, while Birchcliff Energy (TSE:BIR) gained 6.62% and Suncor Energy (TSE:SU) rose 1.18%.
Elsewhere in the sector, Ithaca Energy Inc. (TSE:IAE) plunged almost 33% after it announced that it has ceased discussions with all parties regarding the potential acquisition of all of the outstanding shares of the company.
Alexis Minerals Corp.(TSE:AMC) surged up almost 15% on news that it has received formal credit approval from Credit Suisse for a US $45 million, 4 1/2-year term loan to further the development of the Snow Lake mine in Manitoba.
In mining, Osisko Mining (TSE:OSK) grew 3.20%. Copper heavyweight Teck Resources (TSE:TCK.B) surged 4.92 % and Lundin Mining (TSE:LUN) advanced over 3.9%.
Gold giants Goldcorp (TSE:G) and Kinross (TSE:K) fell over 1% and 0.6% respectively, while Barrick Gold (TSE:ABX) tumbled almost 3%.
In the financial sector, Manulife Financial (TSE:MFC) edged down 0.35%, while the Bank of Nova Scotia gained 2.13% after it reported that its second-quarter operating profit rose as international banking and lending profits grew.
Canada's third-largest bank said Tuesday that it earned $1.46 billion or $1.15 per share in the second quarter, while revenue rose slightly more than 1 percent to $4.7-billion.
Canadian bank earnings reports continue this week, with the Canadian Imperial Bank of Commerce (TSE:CM) and National Bank of Canada (TSE:NA) reporting on Thursday.
On the corporate front, Canadian gold giant Kinross Gold (TSE:K) announced Tuesday that the company will sell its 50 percent interest in the Serra Grande (Crixás) gold mine to subsidiaries of AngloGold Ashanti (NYSE:AU) for $220 million in cash.
The Crixás gold mine is located in the State of Goiás, Brazil.
The deal will see South-African based gold company Ashanti, which holds the remaining 50 percent of the mine, gain full ownership of Crixás in an attempt to expand into the Americas.
Forest Oil Corp (NYSE:FST) said a lawsuit was brought against it and Lone Pine Resources (TSE:LPR), which it earlier owned, that alleged Lone Pine made false statements and hid certain facts in its IPO prospectus.
Publisher Postmedia Network Canada Corp (TSE:PNC.A) said last night it will cut costs by dropping some Sunday editions, charging online fees for several titles and centralizing more editorial production.
Lithium Americas (TSE:LAC) (OTCQX:LHMAF) Tuesday reported its financial and operating results for the fiscal year 2012. For the year, the company invested a total of $39.8 million in property rights, exploration and evaluation activities related to the Cauchari-Olaroz lithium project in Argentina.
US/Europe
US markets were closed for Memorial Day, but rose sharply Tuesday on speculation that Greece will stay in the euro after weekend polls showed voters supporting parties that back the nation’s bailout, and as US data showing stabilization in the housing market bolstered optimism the economy will withstand Europe’s debt crisis.
But analysts expect continued uncertainty over the ultimate outcome of the Greece elections that will keep market sentiment fragile and prone to mood swings.
Four major Greek banks received recapitalization funds under the nation's bailout program.
The Dow Jones industrial average lately jumped 136.53 points to 12,591.36 as traders got back to work followingthe Memorial Day holiday. The Nasdaq composite index gained 34.99 points to 2,872.52 while the S&P 500 futures were ahead 14.24 points to 1,332.06.
Spain is also prominent in investors' minds amid fresh worries about the health of its banking system. Investors have also been wary of about the slowing of China's economy, but there is speculation Beijing will announce more stimulus spending in China, including a program to spur auto purchases.
Manufacturer Foxconn has received orders for a trial production of Apple (NASDAQ:AAPL) TV, though the press report did not specify a timeline.
Facebook (NASDAQ:FB) is in talks to buy Norway’s Opera Software, according to a press report. Opera is the maker of a popular web browser, but is said to be in Facebook’s sights because of its advanced mobile phone software technology.
Facebook’s shares fell to a new low, extending losses from the worst-performing large initial public offering during the past decade to more than 20 percent.
The stock fell as much as 5.9 percent to $30.03 today, slipping below the prior low of $30.94 on May 22. Facebook debuted on May 18 after underwriters sold shares at $38.
Goldman Sachs (NYSE:GS) private- equity unit and P2 Capital Partners agreed to buy Interline Brands Inc. (NYSE:IBI), a distributor of janitorial, plumbing and lighting products that went public in 2004, in a deal valued at $1.1 billion including debt.
The U.S. Justice Department is said to be investigating whether BP (NYSE:BP) officials lied to Congress about the quantity of oil leaking following the 2010 Deepwater Horizon accident.
Officials are also looking into the possibility that engineers involved in efforts to plug the leak attempted to withhold data from the government.
Global package delivery giant FedEx Corp. (NYSE:FDX) agreed to buy transport and logistics company Rapidao Cometa as it strengthens its toehold in Latin America. The deal, which includes 9,000 employees and 45 branches and 770 vehicles and trailers, will further enhance FedEx’s international and Brazil business offerings.
Trustmark Corp. (NASDAQ:TRMK) agreed to merge with BancTrust Financial Group (NASDAQ:BTFG) Tuesday in a $55.4 million deal, as it seeks to deepen its hold in Alabama and Florida.
On the economic front, home values in 20 U.S. cities fell in the 12 months that ended March at the slowest pace in more than a year as lower borrowing costs and an improving job market gave sales a boost.
The S&P/Case-Shiller index of property values fell 2.6 percent from a year earlier after a 3.5 percent drop in February, the group reported today in New York.
Also, the Conference Board's Consumer Confidence Index for May decreased to 64.9 from a revised 68.7 in April, figures from the New York-based private research group showed today.
The report also revealed that the percent of respondents expecting fewer jobs in the next six months increased to 21, a six-month high.
The proportion projecting their incomes will rise over the next six months advanced to 15.2 percent from 13.9 percent. Even with the gain, income expectations are down from the end of 2011.
In the US this week, the all-important monthly jobs report is due out Friday, with economists expecting a gain of 150,000 for non-farm payrolls in May, up from 115,000 the previous month. The unemployment rate is expected to remain unchanged at 8.1 per cent.
Key readings on manufacturing and auto sales are also due out this week.
Stocks in Europe rose on Tuesday following the possibility of further policy stimulus in China, although fears over Spain's banking system kept gains moderate.
European markets finished broadly higher today with shares in France leading the region. The CAC 40 was up 1.45% while Germany's DAX was up 1.21% and Britain's FTSE 100 rose 0.61%.
