GB: Stock rise, commodities up, German economy, U.S. retail sales beat forecasts
TORONTO - The Toronto stock market was positive Tuesday, led by rising energy stocks as oil prices got a boost from surging U.S. retail sales while Germany posted stronger-than-expected growth during the second quarter.
The S&P/TSX composite index climbed 53.01 points to 11,891.34 while the TSX Venture Exchange dipped 0.92 of a point to 1,196.45.
The Canadian dollar was up 0.02 of a cent to 100.78 cents US amid rising prices for copper and crude oil.
U.S. markets were also higher as the Commerce Department reported that retail sales rose 0.8 per cent during July, the largest increase since February. Economists had expected a gain of 0.3 per cent.
"It looks like lower gas prices, a nice rally in stocks and stronger job growth (for July, at least), and a few months away from the stores, helped boost consumer spending," observed BMO Capital Markets senior economist Jennifer Lee.
"A good start to the quarter but continued job gains are needed to ensure it continues."
The Dow Jones industrials gained 28.26 points to 13,197.69, the Nasdaq composite index was up 5.6 points to 3,028.12 and the S&P 500 index rose 3.24 points to 1,407.35.
Germany, Europe’s biggest economy, posted 0.3 per cent growth in the second quarter, beating expectations of a 0.2 per cent increase though slowing from the first quarter’s 0.5 per cent growth.
At the same time, another report showed the chronic debt problems of the 17-nation eurozone monetary union are pushing Europe closer to recession.
Eurostat, the European Union’s statistics agency, said that the economies of both the eurozone and the wider 27-country EU shrank by a quarterly rate of 0.2 per cent in the second quarter of the year. In the first quarter, output for both regions was flat. A recession is officially defined as two straight quarters of falling output.
Spain, Portugal, Cyprus and Greece are already mired in recession.
The worsening debt crisis has worsened the prospects for an economic recovery in the rest of the world.
Policymakers are urging more decisive action, particularly from the European Central Bank, to deal with the debt crisis to restore confidence to the global economy.
Markets have found traction recently after the ECB promised last month to do "whatever it takes" to keep the monetary union intact.
Disappointing economic data has also raised hopes that central banks in the U.S. and China will move to undertake further stimulus measures.
The TSX energy sector led gainers, up 0.64 per cent as the positive economic data helped push the September crude contract on the New York Mercantile Exchange 79 cents higher to US$93.52 a barrel. Canadian Natural Resources (TSX:CNQ) was ahead 58 cents to C$30.73.
The financial sector was also supportive with Manulife Financial (TSX:MFC) up 26 cents to $11.49.
The tech sector was also lower, reflecting a four per cent drop at Research In Motion Ltd. (TSX:RIM) to $7.70.
The base metals sector was down 0.3 per cent while metal prices also climbed after two days of declines in the wake of surprising drops in Chinese exports and Japanese economic growth. The September copper contract on the Nymex edged up a penny to US$3.36 a pound. First Quantum Minerals (TSX:FM) gave back 13 cents to $19.93.
The gold sector was ahead 0.3 per cent as December bullion shed early gains and fell $11.30 to US$1,601.30 an ounce. Barrick Gold Corp. (TSX:ABX) climbed 18 cents to C$34.14.
On the corporate front, a showdown could be brewing between fertilizer giant Agrium (TSX:AGU) (NYSE:AGU) and a U.S. hedge fund, which has accumulated a significant minority stake in the Calgary-based company. Its shares rose $1.15 to $96.68.
Agrium says it has carefully evaluated and rejected the idea of spinning off its retail division, saying shareholders would face too much risk. Agrium made the statement after the Wall Street Journal reported U.S. hedge fund Jana Partners has purchased nearly five per cent of Agrium's stock in a move to push the fertilizer giant to cut costs and sell its retail arm.
European bourses advanced with London's FTSE 100 index up 0.35 per cent, Frankfurt's DAX climbed 0.63 per cent while the Paris CAC 40 was ahead 0.44 per cent.
Earlier in Asia, Japan’s Nikkei 225 rose 0.5 per cent, Hong Kong’s Hang Seng added 1.1 per cent, South Korea’s Kospi rose 1.3 per cent while on mainland China, the Shanghai Composite Index gained 0.3 per cent while the smaller Shenzhen Composite Index gained 0.7 per cent.
In other corporate developments, ATS Automation Tooling Systems Inc. (TSX: ATA) had a $9.8-million profit in its latest quarter, compared to a loss of $5 million or six cents per share a year ago, as it reduced losses from its troubled solar equipment arm. Its shares dipped one cent to $8.43.
Home Depot’s net income rose 13 per cent in its fiscal second quarter to US$1.53 billion, or $1.01 per share. The results topped the 97 cents per share that analysts polled by FactSet expected.
Revenue climbed to $20.57 billion from $20.23 billion, up two per cent. Wall Street expected higher revenue of $20.74 billion but its shares climbed 2.8 per cent to US$54.33.
Groupon plummeted 23 per cent to US$5.81. The online coupon company’s stock earlier fell to an all-time low of US$5.74, down $1.66 after its sales growth fell short of expectations partly due to worsening conditions in Europe.
