Signs that American consumers are spending more money and the possibility of more stimulus measures from the U.S. Federal Reserve pushed stock markets sharply higher on Monday.
The S&P/TSX Composite Index ended Monday’s session up 177.34 points, or 1.4%, to 12,504.85
The Canadian dollar grew 0.57 cents to 102.3 cents U.S.
Commodity prices Monday were mixed, with oil prices higher. The October crude contract on the New York Mercantile Exchange gained ground, pushing the energy sector up. Suncor Energy gained 78 cents to $30.56 while Canadian Natural Resources climbed $1.21 to $36.05.
The base metals sector was solidly ahead as copper prices declined one cent to $4.09 U.S. Teck Resources was up $1.04 to $41.65 while First Quantum Minerals ran up $1.17 to $22.49.
Also improving investor sentiment Monday was news that Greece’s second and third largest lenders, Eurobank and Alpha Bank, announced plans to merge in order to better withstand the country’s acute financial crisis. The widely anticipated move would create Greece’s biggest bank, and will see a euro500 million investment from a Qatari investment fund, Paramount Services Holding Ltd.
The TSX financials sector was also in the green, ahead of earnings reports this week. Scotiabank hands in earnings Tuesday and its shares rose $1.01 to $52.35 while CIBC which reports Wednesday, gained 70 cents to $71.90.
The gold sector was down as Goldcorp Inc. declined 68 cents to $50.30 and Barrick Gold Corp. faded 95 cents to $49.00.
There was also major buying activity in the sector as AuRico Gold Inc. reached an agreement to buy Northgate Minerals Corp. in a stock-swap transaction valued at about $1.46 billion. AuRico, formerly known as Gammon Gold, will acquire each share of Northgate for 0.365 of an AuRico share, or about $5.01 per share.
The agreement also terminates Northgate’s acquisition of Primero Mining Corp. for about $409 million U.S., announced last month. AuRico shares declined $2.67 to $11.05, Northgate shares surged 83 cents or 26.8% to $3.93 while Primero shares fell 67 cents to $3.47.
Stock markets made solid gains last week following steep losses the week before with the TSX rising 2.7% and the Dow industrials up 4.3%
But market sentiment remains fragile and other economic indicators this week are expected to show slowing global growth. Investors will take in data Tuesday on how the Canadian economy performed during June. It is expected to show growth close to zero that month and for the second quarter.
Elsewhere on the corporate front, Magna International Inc. and the Ontario government are set to announce an investment of more than $400 million in research and development into electric vehicle technologies. Government sources say the deal, which also involves funding to the tune of $48 million from the Ontario government. Magna shares advanced $1.58 to $37.20.
The chairman and chief executive of Sino-Forest Corp. has resigned. Allen Chan stepped down Sunday, just two days after the Ontario Securities Commission halted trading in the TSX-listed Chinese timberland operator’s shares amid allegations of fraud. Also, Standard & Poor’s has withdrawn its rating on Sino-Forest.
The company is listed on the TSX but is based in Hong Kong and operates tree farms and logging businesses across China.
ON BAYSTREET
The TSX Venture Exchange gathered 17.55 points to 1,769.86, while the Nasdaq Canada index gained 19.14 points to 525.83
In Toronto, all but one of the 14 subgroups were higher on the day, climbing on the back of a 4.5% jump by metals and mining stocks, followed by a 2.9% surge in global base metal prices, and a 2.7% hike by information technology.
Gold was the lone laggard, slipping 1.5%.
ON WALLSTREET
In New York, stocks rallied Monday, following a trifecta of positive news: A Greek bank deal, a solid U.S. consumer spending report and relief that Hurricane Irene caused less damage than expected.
The Dow Jones Industrials vaulted 254.71 points, or 2.3%, to greet the closing bell at 11,539.20
The S&P 500 gained 33.28 points to 1,210.08, while the Nasdaq spiked 82.26 points to 2,562.11.
Despite the recent strength -- stocks staged a solid advance last week -- the major indexes are still in the red for the year.
In fact, August remains on track to be the worst month for stocks in more than a year. The Dow is off more than 5%, the S&P 500 is down almost 7% and the Nasdaq is nearly 8% lower.
Trading volume is expected to remain light Monday as the New York subway system and commuter rail services slowly return to full service.
With the weather story behind them, investors turned their attention to assessing the impact of Hurricane Irene, which was less dire than feared.
That helped lift insurance company stocks Monday. Travelers Companies Inc. rose 5%, leading the Dow's advance. Hartford Financial Services Group surged 12%, and Allstate shares climbed more than 7%, making the two insurers among the top gainers on the S&P 500. MetLife and Chubb Corp. spiked between 4% and 5%.
Bank of America announced that it has agreed to sell 13.1 billion shares, or half of its stake, of China Construction Bank in a private transaction for $8.3 billion. The bank's stock rose 5.4%.
Financial stocks Citigroup, UBS and Morgan Stanley also moved higher.
Despite widespread flight delays stemming from the storm, shares of major airlines were higher.
Jetblue, Southwest, AMR Corp., Delta and United Continental were all up between 5% and 7%.
Economically speaking, personal income rose 0.3% in July, while spending climbed 0.8% during the month.
Economists were expecting income to tick up 0.4%, spending to edge up 0.5%.
Pending home sales figures for June are slated to come in after the open and are expected to fall 1.4%, after rising 2.4% the prior month.
The price on the benchmark 10-year U.S. Treasury note sagged, raising the yield to 2.27% from Friday’s 2.19%. Prices and yields move in opposite directions.
Oil for October delivery added $2.06 to $87.42 U.S. a barrel.
Gold futures for December delivery fell $6.60 to $1,790.70 U.S. an ounce
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