The Toronto stock market gained ground early Monday, as a major acquisition combines Canada’s largest grocery and pharmacy chains, and as investors digested the latest economic growth data from China.
The S&P/TSX Composite Index moved ahead 82.81 points to begin the day at 12,544.98
The Canadian dollar faded 0.17 cents to 96.11 cents U.S.
Loblaw Companies Ltd. said it has struck a friendly deal to purchase Shoppers Drug Mart Corp. for $12.4 billion in cash and stock.
Loblaw is offering $33.18 in cash plus about six-10ths of a Loblaw common share for each Shoppers Drug Mart common share. Loblaw shares gained $3.94, or 8.9%, to $51.49, while Shoppers shares ballooned $12.87, or 26.6%, to $61.27
In a related move, Loblaw’s majority owner, George Weston Ltd. will subscribe for 10.5 million additional shares of the grocer for $47.55, the closing price for Loblaw shares on Friday. Proceeds from the Weston stock purchase will be used to pay a portion of the Shoppers purchase. Weston shares grew $4.37, or 5.3%, to $87.65.
Gold stocks showed some resilience, as Banro Gold gained three cents, or 4.2%, to 74 cents. Barrick Gold picked up 35 cents, or 2.3%, to $15.84.
The TSX ended last week with a gain of 327 points or 2.7%, leaving it in positive territory year to date, albeit by only about 30 points as traders bought up resource stocks that have beaten down.
ON BAYSTREET
The TSX Venture Exchange added 1.78 points to 900.20
All but two of the 14 Toronto subgroups were higher for starters, as consumer staples rocketed 7.9%, while gold gained 0.8% and industrials strengthened 0.7%.
The two laggards were in metals and mining, down 0.8%, and telecoms, off 0.1%.
ON WALLSTREET
U.S. stocks were little changed early Monday as investors weighed reports on Chinese economic growth and U.S. retail sales.
The Dow Jones Industrials crept up but 6.87 points from Friday’s all-time record to 15,471.20
The S&P 500 index inched higher 0.09 points to 1,680.28. The NASDAQ Composite dipped 1.06 points to 3,599.02
Shares of Leap Wireless International jumped 115% after AT&T said on Friday that it plans to acquire the prepaid wireless provider for about $1.2 billion U.S.
Bank earnings remain in focus Monday. Citigroup reported quarterly net income of $4.2 billion U.S., or $1.34 per share, driven by a jump in revenue and lower loan losses.
Shares of jeweler Tiffany & Co. were up 3% after analysts at Stifel upgraded the stock.
Boeing's stock edged up after British investigators said that a Dreamliner fire at London Heathrow Airport last Friday was not linked to its batteries, which have created problems in the past.
The Chinese government said gross domestic product rose by 7.5% in the second quarter, matching official estimates. While growth was slower than the 7.7% rate in the first quarter, investors were relieved that Chinese GDP was not weaker than expected.
In domestic economic news, U.S. retail sales rose 0.4% in June, the Census Bureau said Monday. That's a slowdown from a 0.6% rise a month earlier, and weaker than expected.
Separately, the New York Federal Reserve bank said its index of manufacturing activity in the region rose to 9.5 in July, from 7.8 in June.
Prices for the 10-year U.S. Treasury hiked, dropping yields to 2.56% from Friday’s 2.60%. Treasury prices and yields move in opposite directions.
Oil prices inched higher two cents to $105.97 U.S. a barrel.
Gold prices increased $5.80 to $1,283.40 U.S. an ounce.
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