The Toronto stock market lost more ground Thursday morning, mid a mixed bag of earnings from three of Canada's big banks. Also, traders looked to U.S. jobs data that could provide a clue about when the Federal Reserve might start to cut back on key stimulus measures.
The S&P/TSX composite index wilted by 55.76 points to begin Thursday at 13,249.16
The Canadian dollar inched back 0.03 cents at 93.58 cents U.S.
Toronto-Dominion Bank had $1.622 billion of net income in the fourth quarter, up from $1.597 billion a year ago. On an adjusted basis, TD earned $1.90 per share, up from $1.83 in the fourth quarter of 2012 but nine cents less than analysts had expected. TD also raised its dividend by a penny to 86 cents a share and a two-for-one stock split effective early next month.
Most of TD's major units showed increases but net income from wholesale banking fell by 61% to $122 million from a year earlier, due to lower security gains and higher non-interest expenses. TD shares gave back two dollars to $93.75 soon after the open.
Royal Bank of Canada had $2.119 billion of net income in its fiscal fourth quarter, an 11% increase from last year. Adjusted diluted earnings per share were $1.42. Its main Canadian banking arm had $1.08 billion of net income, up 5% from a year ago.
Its capital markets and its investor and treasury units also had increases while profit at RBC Insurance was down and wealth management was flat. Its dividend remains unchanged.
RBC also announced that Gordon Nixon intends to retire effective Aug. 1, 2014, after 13 years as president and chief executive. Royal shares ditched $1.02 to $67.98.
CIBC made $836 million in net income in its fiscal fourth quarter, down from $852 million in the same period last year. After adjusting for one-time items, earnings were $2.22 per share, seven cents ahead of estimates and up 8.8% from a year ago. Revenue of $3.2 billion fell short of estimates of $3.26 billion.
CIBC says its results were impacted in part by a $39-million restructuring charge relating to FirstCaribbean International Bank and a $35-million impairment of an equity position tied to its U.S. leveraged finance portfolio. A dividend increase had been expected but its dividend was unchanged. CIBC shares lost a nickel to $90.00.
Traders will also look to Barrick Gold a day after Peter Munk announced he will retire next year from the board of the world's largest gold producer. Former Goldman Sachs executive John Thornton, who has shared the chairman's duties with Munk since 2012, will be named chairman.
Munk's departure is part of broad changes at the gold miner, including the hiring of a chief operating officer and the nomination of four new independent directors. Barrick shares reared back four cents to $16.68.
The TSX financial sector has been a drag so far this week following earnings from Bank of Montreal and National Bank. BMO beat earnings expectations but investors were disappointed with, among other things, weakness in its U.S. operations. National Bank also lost ground even as it met analyst forecasts and upped its dividend. National shares fell 60 cents to $88.93.
Still, the TSX financial sector started this week up more than 20% year to date.
Scotiabank posts earnings on Friday. Its shares fell 80 cents to $62.90 early Thursday.
In other earnings news, Dollarama Inc. says its third-quarter overall sales increased by 14.2% to $522.9 million while comparable-store sales were up 4.8%.
Net income was $61.7 million, up from $51.48 million a year earlier, while diluted earnings per share for the Montreal-based discount retail chain rose to 87 cents per share from 68 cents. Dollarama shares dropped $2.42 to $84.68.
On the economic beat, Statistics Canada reported this morning that building permits hiked 7.4% in October to $7.2 billion, in contrast with a projected rise of 1%, and follows a 4.1% rise in the previous month. StatsCan adds the total value of permits showed a slight upward trend on the strength of eight monthly increases since the beginning of the year.
The IVEY Purchasing Managers’ Index report rolled in this morning for November from Western University in London, and showed a reading of 53.7, compared to 62.8 for October, and 47.5 for November 2012. .
The PMI measures business spending month-to-month. A figure above 50 shows an increase while a figure below 50 shows a decrease.
ON BAYSTREET
The TSX Venture Exchange gained 1.38 points to 920.94
All but three of the 14 TSX subgroups were lower in the early going, weighed mostly by gold, off 2.1%, materials, down 1.3%, and the metals and mining, dipping 0.8%.
The three gainers were information technology, inching up 0.2%, while industrials and real-estate stocks cleared breakeven by 0.1% each.
ON WALLSTREET
Stocks weakened Thursday morning despite more upbeat reports on the U.S. economy.
The Dow Jones Industrials fell 37.95 points, to 15,851.80
The S&P 500 index skidded 0.95 points to 1,791.86. The NASDAQ demurred 5.62 points to 4,032.38
On the corporate front, Jos. A Bank reported a decline in quarterly net sales and net income, compared with the prior year. The clothing retailer has been in a bizarre takeover battle with Men's Wearhouse, which originally rebuffed a hostile bid from Jos. A Bank before turning the tables and offering to buy its smaller rival.
Apple shares rose following a report that the company is nearing a deal with China Mobile to sell Apple's iPhone. China Mobile is the world's largest mobile carrier.
On matters economic, he U.S. government revised its initial report on third-quarter economic growth to 3.6%, up from the previous estimate of 2.8%. The improvement was largely driven by inventory growth as companies restocked their shelves ahead of the holiday shopping season.
And the number of Americans filing first-time claims for unemployment benefits fell more than expected last week, the U.S. Labor Department said. Economists said the decline may have been distorted by the Thanksgiving holiday.
But the upbeat economic news failed to boost the market. Many investors believe that good economic news makes it more likely that the Federal Reserve will begin scaling back, or tapering, its monthly bond purchases.
The government's November jobs report is due Friday. Economists expect that report to show 183,000 jobs were added last month.
Prices for 10-year U.S. Treasuries sagged, raising yields to 2.85% from Wednesday’s 2.84%. Treasury prices and yields move in opposite directions.
Oil prices gained 21 cents to $97.41 U.S. a barrel.
Gold prices slid $24.10 to $1,223.10 U.S. an ounce.
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