A strong kickoff to the banks’ quarterly earnings reporting season and positive economic data helped distract investors from Europe’s debt crisis Wednesday, pushing the Toronto stock market higher.
The S&P/TSX composite index ended the day well off its highs, but still gaining 25.82 points to 11,543.90, after springing up around 150 points Wednesay.
The TSX financial sector rose after Bank of Montreal handed in quarterly earnings that beat expectations. The bank reported quarterly earnings doubled from a year ago to $745 million. That came out to $1.26 per share of net earnings, or $1.28 per share of cash earnings -- 18 cents ahead of analyst estimates in both cases.
Provisions for credit losses in the quarter were reduced by $123 million from a year ago to $249 million for the three months ended April 30. BMO shares were up $1.65 at $60.36.
Elsewhere in the sector, Royal Bank, which hands in earnings Thursday, gained 25 cents to $59.24.
Investor sentiment picked up after the Organization for Economic Co-operation and Development, a watchdog for 31 of the most developed economies, raised its forecasts for GDP growth in member countries -- which include Canada, the United States, Japan, Germany and the United Kingdom.
It expects overall growth to come in at 2.7% this year, up from a forecast of 1.9% last November. It added that Canada, Japan and the U.S. are still expected to outpace Europe.
The TSX energy sector rose as the OECD data helped send the July crude contract on the New York Mercantile Exchange up, despite a bigger-than-expected increase in crude-oil inventories in the United States last week. The U.S. Energy Information Administration report showed an increase of 2.4 million barrels, more than double what analysts had expected.
Suncor Energy was up a dime at $30.76 while Canadian Natural Resources improved 54 cents to $34.84.
Among gold issues, Centerra Gold Inc. was ahead 48 cents at $12.40, while Iamgold Corp. advanced 13 cents to $18.22.
The base metals sector was higher as July copper rose five cents to $3.09 U.S. a pound. Teck Resources climbed 37 cents to $34.67.
FNX Mining Co. Inc. gained 67 cents to $11.99 after its shareholders and those of Quadra Mining Ltd. approved a plan of arrangement that will see the companies merge to form Quadra FNX Mining Ltd.
The new company will trade under the new ticker symbol QUX starting Friday morning. Quadra FNX Mining will be added to the S&P/TSX Global Mining, Global Base Metals and Equal Weight Global Base Metals indices.
Telecoms were down, as BCE Inc. gave back 76 cents to $30.26.
Investors were already sniffing around for bargains after global markets fell back sharply over the last month because of fears that the European debt crisis could worsen and potentially derail the global economic rebound.
Fortress Energy Inc. axed its annual meeting, making an official public announcement, just hours before it was set to begin Tuesday. The company said the meeting was being postponed while its board of directors reviews strategic alternatives. It plans to reschedule the meeting before the end of June. Fortress shares fell one cent to 18 cents.
In economic news, Statistics Canada said that non-farm payroll employment rose by 30,100 or 0.2% in March, bringing total gains since the start of the upward trend in August 2009 to 115,700.
Economists were expecting payrolls to rise 0.1%, following February's 0.1% increase.
The Canadian dollar settled back 0.14 cents to 93.52 cents U.S.
ON BAYSTREET
Eight of the 14 TSX subgroups faded by the end of the day. Telecoms was the biggest loser, at 1.7%, while consumer discretionary and consumer staples lost 0.3% each.
The half-dozen gainers were led by metals and mining, up 2.3%, financials, gaining 0.8% and energy stocks, progressing 0.7%.
The TSX Venture Exchange was up 20.29 points to 1,470.44, while the Nasdaq Canada index moved 3.52 points higher to 672.65
ON WALLSTREET
In New York, stocks erased gains by the close Wednesday, with the Dow ending below 10,000 for the first time in three months, as worries about global growth and a slide in the euro overshadowed upbeat economic news.
The Dow Jones industrial average slid 69.30 points to 9,974.45.
The S&P 500 index lost 6.08 points to 1,067.95. The Nasdaq composite index shaved off 15.07 points to 2,195.88.
A global market rally and a strong housing market report gave stocks a boost in the morning, but trading was choppy through the rest of the session as the euro weakened. Stocks slipped in the last hour of trading.
Stocks have tumbled in May, with the three major indexes all losing more than 10% each, falling into "correction" mode as investors have worried that Europe's growing debt crisis is going to cut into U.S. and global economic growth.
A $1-trillion U.S. aid package announced by European leaders helped temper, but not eliminate, worries about the threat of so-called contagion stemming from problems with debt-plagued nations.
Greece got the ball rolling, but concerns remain about the other so-called PIIGS -- Portugal, Italy, Ireland and most recently, Spain. News that Spain's central bank had to take over one of the nation's oldest savings banks over the weekend ushered in the latest wave of European-crisis driven worries. Reports of heightened tensions between North and South Korea added to jitters Tuesday.
Whether the stock correction -- a decline of more than 10% off the highs -- becomes a bear market -- a drop of 20% to 30% off the highs -- remains to be seen.
One expert said that a lot of investors who were skeptical of the huge rally off the March 2009 lows have been waiting for the ideal pullback to get back in, after several smaller pullbacks failed to cross the 10% threshold.
Economically speaking, new home sales jumped 15% in April, thanks to still-low mortgage rates and a homebuyer tax credit that expired at the end of last month. Sales rose to a seasonally-adjusted rate of 504,000 from a revised 439,000 in the previous month. Economists surveyed by Briefing.com expected sales of 425,000.
Another report released before the start of trading showed that durable goods orders rose 2.9% in April, versus forecasts for a gain of 1.5%. Goods orders were flat in March, a revision on an earlier reading that showed a drop in orders.
However, orders excluding transportation fell 1% after rising 4.8% in the previous month. Economists thought orders would rise 0.7%.
The House Natural Resources Committee will hold a hearing on the Gulf oil spill. The hearing will focus on the cause of BP's oil rig explosion and its implications for the future of offshore oil and gas policy.
Treasury prices staggered, upping the yield on the 10-year note to 3.22% from 3.16% where it stood Tuesday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil picked up two dollars to $70.75 U.S.
Gold prices gained $14 to $1,212 U.S. an ounce
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