Higher than expected earnings from Bank of Montreal sparked a sharp rally in the financial sector Tuesday and sent the Toronto stock market more than 100 points higher.
The S&P TSX Composite index surged 130.56 points, or 1.2%, to end the day at 10,920.53, after the bank reported net income of $557 million or 97 cents a share for the quarter ended July 31.
That was up from $521 million recorded the year before and beat expectations of 95 cents a share.
Provisions for loan losses fell to $417 million from $484 million a year ago.
Bank of Montreal shares climbed $3.33, or 6.8%, to $52.34 and the financial sector was ahead 3.2% with all of the major Canadian banks reporting quarterly earnings this week. Royal Bank gained $2.12, or 4.2%, to $52.82 while CIBC rose $2.81, or 4.3%, to $68.56.
The TSX was off early highs as the energy sector deteriorated alongside falling oil prices. The energy sector was down as Suncor Inc. moved 45 cents lower to $34.82.
Other commodity prices were mixed as September copper slipped 5.9 cents to $2.856 U.S. a pound.
The gold sector was ahead, with Kinross Gold Corp. ahead 57 cents, or 2.8%, to $31.15 while Ivanhoe Mines surged $2.18 or 23% to $11.66 after the Mongolian parliament amended legislation that should facilitate development of the company's proposed Oyu Tolgoi copper-gold project. A major change involves a repeal of a windfall profits tax.
Shares in West Timmins Mining fell despite a positive drilling report on the Thunder Creek venture in Timmins, Ont., operated as a joint venture with Lake Shore Gold. West Timmins stock was down 18 cents or 7.3% at $2.24.
Shares of Halifax-based mineral explorer Linear Metals Corp. soared 17 cents or 73.9% to 40 cents after the company said it's restarting exploration on its 100%-owned Seymour Lake lithium-tantalum-beryllium property north of Lake Nipigon in northwestern Ontario.
In other corporate news, shares in convenience store operator Alimentation Couche-Tard climbed $1.27, or 7.2% to $18.86 as the company reported Tuesday that its profits more than doubled to $91.1 million U.S. during the first quarter despite a 15% drop in sales, mainly due to lower fuel prices.
Absolute Software Corp. said Tuesday an income tax recovery helped propel the company to a fourth-quarter profit of $16.5 million, reversing a year-earlier loss of $2.3 million. Quarterly revenue climbed 28 per cent to $14.3 million, while top line performance for the fiscal year improved 41 per cent to $53.2 million. Its shares advanced 12 cents, or 2.1%, to $5.90.
There was no major economic news on tap from Canada on Tuesday.
The Canadian dollar was down 0.72 cents to 92.15 cents U.S.
ON BAYSTREET
Of the 14 TSX subgroups, 10 ended the day positive, led by financials, ahead 3.4%, gold, up 1.8% and metals and mining, advancing 1.7%.
The four laggards fell on the shoulders of energy, down 1%, utilities, off 0.8%, and health-care stocks, sliding 0.4%.
The TSX Venture Exchange was down 2.69 points, to 1,183.67, while the Nasdaq Canada Index shed 6.83 points to 745.43.
ON WALLSTREET
In New York, stocks gained Tuesday, extending a recent rally, after reports showed that consumer confidence and home prices are starting to recover. News that President Obama is nominating Federal Reserve chief Ben Bernanke for a second term in office added to the positive sentiment.
The Dow Jones Industrials ended the day up 30.01 points to 9,539.29. The S&P 500 index gained 2.43 points to 1,028. The Nasdaq composite index progressed 6.25 points to 2,024.23.
Stocks slipped Monday as investors took a step back after pushing the major gauges to new 2009 highs Friday. But after Monday's brief hiccup, stocks resumed their advance Tuesday.
Stock gains were pretty broad based, with 21 of 30 Dow stocks rising, led by Boeing, JPMorgan Chase, United Technologies and Travelers Companies.
But falling oil prices cut into any stock gains, dragging down the influential energy sector. Dow components Exxon Mobil and Chevron declined.
Since bottoming at a 12-1/2 year low on March 9, the S&P 500 is up 52% as of Tuesday afternoon. The pace and breadth of the run up has left many Wall Streeters calling for a big selloff in September and October. But so far, there has been no indication of that.
On the economic front, U.S. home prices rose 2.9% in the second-quarter versus the first quarter, according to an S&P/Case-Shiller report. That's the first quarterly rise in prices in three years and could signal that the housing market has bottomed.
The 20-city index declined 15.4% in June versus a year ago, but that was shy of forecasts for a drop of 16.4% versus a year ago.
President Obama nominated Bernanke to a second term as head of the Federal Reserve, as expected. Obama made the announcement on Tuesday morning from Martha's Vineyard, Mass., where he is vacationing.
The reappointment is expected to receive the approval of the Senate.
The White House released its deficit and economic forecast. It predicts a federal budget deficit of $9 trillion U.S. over the next decade and a deficit of $1.58 trillion U.S. in 2009.
The Congressional Budget Office (CBO) released its own forecast shortly after the Obama administration. The CBO said the 2009 deficit will total $1.6 trillion U.S.
Treasury prices gained ground, early in a week that brings over $100 billion U.S. in government debt auctions. The rise in prices dropped the yield on the benchmark 10-year note to 3.43% from 3.47% Friday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil lost $2.32 to $71.84 U.S.
Gold prices perked two dollars to $946 U.S. an ounce.
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