The Toronto stock market sidled back by midday Thursday, despite hopes that European officials are coordinating help for Spain’s troubled banking sector and that a lower interest rate announced by China will offset softer growth.
The S&P/TSX Composite Index slid 14.44 points to break for lunch at 11,618.96
The Canadian dollar strengthened 0.22 of a cent to 97.56 cents U.S.
The TSX racked up a strong triple-digit gain for a second session Wednesday as traders continued to pick up stocks that have been beaten down amid concern about the potential global impact of the European Union’s drawn-out debt crisis.
Buyers moved in following a drop of almost 2% last week that left the market down about 10% from the highs of 2012 in late February.
Thursday, traders also took in an earnings report from fashion retailer Lululemon which beat analyst estimates. The Vancouver-based company’s quarterly profit hit $46.6 million U.S. or 32 cents per diluted share, two cents ahead of the consensus estimate. Revenue rose to $285.7 million U.S., a 53% increase from $186.8 million U.S. a year earlier.
But its stock was down as it called for just over $1.3 billion U.S. of revenue for the full year and earnings of between $1.55 and $1.60 per share— at least three cents per share below expectations.
The TSX found further support from resource stocks as prices for oil and metals advanced. Suncor Energy rose 40 cents to $29.64.
The base metals group ran ahead while the July copper contract gained four cents to $3.42 U.S. a pound after running up nine cents Wednesday. Teck Resources moved ahead $1.24 to $33.55.
Railroad stocks rose alongside miners with Canadian National Railways up $1.18 to $84.37.
The financials sector improved and TD Bank climbed 60 cents to $78.93.
Gold stocks headed south, though, with Barrick Gold Corp. declining $1.18 to $40.35.
In other corporate news, shares in telecom technology company Sandvine Corp. tumbled 19% to $1.15 as the company warned that second-quarter revenue was well short of expectations. It now expects between $18 million and $18.5 million of revenue for the quarter, about $4 million below a consensus estimate compiled by Thomson Reuters before the announcement.
Sandvine chief executive Dave Caputo says the revenue shortfall is the result of a delay in negotiating a deal with a major customer.
Agrium Inc. shares were up $1.46 to $81.89 after it said its dividend is going to more than double to 50 cents a share, reflecting its confidence in the future outlook. The Calgary-based company sells fertilizer wholesale globally and operates a North American retail operation
ON BAYSTREET
The TSX Venture Exchange gave back 9.36 points to 1,293.28. The Nasdaq Canada index tacked on 2.10 points to 370.18
All but two of the 14 Toronto subgroups were positive midday, as metals and mining issues vied for the lead with their cousins among global base metals, each tacking on 1.2%, with consumer discretionary stocks gaining 1%.
The two laggards were in gold, down 4.1%, and materials, fading 2.5%.
ON WALLSTREET
U.S. stocks rose Thursday morning after a surprise rate cut by China's central bank and a successful bond auction by Spain. But the rally eased as Federal Reserve chief Ben Bernanke gave no indication of impending stimulus from the U.S. central bank.
The Dow Jones Industrials strengthened 99.83 points to greet noon at 12,514.62
The S&P 500 was 7.62 points higher to 1,322.75. The tech-rich Nasdaq Composite Index was up 8.83 points to 2,853.55
Stocks opened sharply higher after China's central bank cut its range of lending and deposit rates by a quarter percentage point in an effort to address the slowdown in the nation's manufacturing sector. Its key one-year lending rate fell to 6.31%.
But the indexes pulled back after Fed chairman Ben Bernanke told Congress that the central bank stands ready to act, but gave no indication of imminent additional easing
Yoga clothing retailer Lululemon Athletic plunged after releasing a weak outlook along with its first-quarter results.
Best Buy shares sank after the retailer's founder and largest shareholder, Richard Schulze, announced plans to resign as chairman and a director.
Food producer J.P. Smucker reported that operating earnings per share rose 10 cents to $1.10 U.S., better than the drop of one cent per share forecast by analysts.
Nasdaq OX Group, which operates the Nasdaq stock exchange, announced its plans to spend $40 million U.S. to compensate trading firms for losses caused by glitches that delayed Facebook's debut. On Wednesday, Nasdaq CEO Bob Reified apologized for the problems but said affected investors should talk to their brokers.
Korean electronics-maker Samsung named a new chief executive Thursday. The Wall Street Journal reported that the company also intends to launch its new smartphone as planned, despite Apple seeking an injunction against its sales as part of a patent infringement lawsuit.
Shares of Apple edged higher, while Samsung shares closed up 5% in trading in South Korea.
China's central bank cut its range of lending and deposit rates by a quarter percentage point in an effort to address the slowdown in the nation's manufacturing sector. Its key one-year lending rate fell to 6.31%.
While there had been growing hopes for action by the Chinese government to stimulate the economy, the timing of Thursday's announcement was a surprise.
Meanwhile, the Spanish government held a bond auction that was an important test of its ability to raise money from investors, two days after its treasury minister warned the country was at risk of being shut out of financial markets.
Demand was more than three times the €611 million worth of 10-year bonds that Spain offered, up from a bid-to-offer ratio of 2.42 in April. But the interest rate Spain had to pay to sell the debt rose to 6.044% from 5.743% in April.
The yield for Spain's 10-year debt edged slightly lower to 6.16% in trading following the auction.
Spanish bond yields have been rising recently as investors demand an increasingly high risk premium to lend money to the government. Fears are growing that the country will need to be bailed out if it can't come up with a way to re-capitalize its banking sector, which some estimates put at a cost of up to €100 billion.
Economically speaking, first-time claims for unemployment insurance totaled 377,000 in the week ended June 2, the U.S. Labor Department said. That's 2,000 more than the consensus forecast, but was down 12,000 from the prior week.
A new report on consumer credit will be released at 3 p.m. ET. Consumer credit for April is expected to have increased by $12.7 billion U.S.
The price on the benchmark 10-year U.S. Treasury rose before noon ET, lowering yields to Wednesday’s 1.65%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil gained 13 cents to $86.15 U.S.
Gold futures for August delivery fell $36.10 to $1,598.10 U.S. an ounce.
Related Stories
