BS: TSX little changed as dollar jumps on inflation
The Toronto stock market opened little changed Friday as a higher American currency helped push oil and gold prices lower.
The S&P/TSX composite index moved 8.2 points lower to 12,031.8. The TSX Venture Exchange added 1.2 points to 1,576.06.
The greenback has gained strength over worries about the Greek debt crisis. The country said it might turn to the International Monetary Fund for support if European leaders can’t agree to a bailout plan next week. Worries about Greece’s debt have hung over stock markets for the past two months.
The industrials sector was the main gainer with Bombardier Inc. (TSX:BBD.B) ahead six cents to $5.84.
The energy sector was slightly lower as the April crude contract on the New York Mercantile Exchange dropped 27 cents to US$81.93 a barrel. Canadian Oil Sands Trust (TSX:COS.UN) declined 30 cents to $29.05.
Gold companies led decliners as bullion prices also backed off with the April bullion contract in New York down $3 to US$1,124.50 an ounce.
Barrick Gold Corp. (TSX:ABX) shares were down 26 cents to $40.06 as the world’s biggest gold miner said it expects that an initial public offering for shares in its African Barrick Gold spinoff will reap US$834 million in proceeds. The IPO for 101 million ordinary shares would be priced at 5.75 British pounds or $8.79 per share on the main market of the London Stock Exchange.
The base metals sector was slightly higher as May copper rose a cent to US$3.41 a pound.
Meanwhile, the Canadian dollar advanced after the latest inflation data came in higher than expected while a strong retail sales report reinforced the view that the Canadian economy is rapidly recovering from the recession.
The loonie was up 0.46 of a cent to 99.11 cents US after Statistics Canada said Friday that consumer prices rose 1.6 per cent last month, following a 1.9 per cent increase the previous month. Economists had been expecting prices to rise at an annualized rate of 1.4 per cent.
One reason for the dollar’s steady run towards parity with the U.S. dollar this year has been the expectation that the Bank of Canada will raise interest rates, likely as soon as this summer.
“While the Bank will not overreact to the persistent high-side surprises just yet, rate hikes are coming up fast on the near-term horizon,” said BMO Capital Markets chief economist Doug Porter.
“We continue to expect the tightening cycle to begin in July, but cannot completely rule out the Bank going ahead of that if core inflation does not back down soon.”
Core inflation, which excludes volatile items such as energy and food, also beat forecasts. It rose one percentage point to 2.1 per cent, the first time it has been above the closely-watched target of two per cent since December 2008.
Meanwhile, a burst of strong sales at home improvement outlets helped sent retail sales up 0.7 per cent in January, higher than the 0.5 per cent reading economists were expecting. Sales at those stores were up 7.4 per cent in January, which was the final month of the federal government’s Home Renovation Tax Credit program.
Retail sales declines were led by a 1.5 per cent drop in the automotive sector.
New York markets were slightly higher amid a dearth of market moving economic data.
The Dow Jones industrial average moved up 24.4 points to 10,803.6. The blue chip index gained 45 points Thursday after the latest inflation reading in the U.S. came in flat, which reassured investors that the U.S. Federal Reserve will keep interest rates low for quite some time yet.
The Nasdaq composite index climbed 0.19 of a point to 2,391.47 while the S&P 500 index climbed 1.05 points to 1,166.85.
In corporate news, shares in Palm Inc. plunged $1.04 or 18.24 per cent to US$4.61 in New York after the company reported a wider than expected quarterly loss, and warned about its current quarter sales. The company said its having a difficult time getting consumers to pay attention to its phones in a market dominated by iPhones and BlackBerrys.
Oil and gas producer Nexen Inc. (TSX:NXY) and partner Shell (NYSE:RDS.A) have made a “significant” oil discovery in the eastern Gulf of Mexico, Nexen said Friday. Calgary-based Nexen said this would be the third discovery in the area and its results have “exceeded our pre-drill expectations.” Nexen shares gained 20 cents to $24.14.
Eldorado Gold Corp. (TSX:ELD) shares fell 46 cents to $13.10 as the company reported profits of $33.3 million in its fourth quarter as revenue from gold sales increased 29 per cent due to record production and higher gold prices.
Overseas, Japan’s Nikkei 225 stock average climbed 0.8 per cent and Hong Kong’s market rose 0.2 per cent.
London’s FTSE 100 index was up 0.72 per cent, Frankfurt’s DAX edged up 0.44 per cent while the Paris CAC 40 was up 0.48 per cent.
