The Toronto stock market moved higher Wednesday afternoon as traders looked for more clarity on Greece’s plan to put its bailout plan to a referendum and took in some reassuring words on the economy from the U.S. Federal Reserve.
The S&P/TSX composite index prospered 126.66 points or 1.1%, on the day to 12,241.80, in a broad-based recovery a day after being rattled, along with most major world markets, by the referendum announcement.
The Canadian dollar regained 0.50 cents to 98.63 cents U.S. The loonie had plunged more than two cents Tuesday after the surprise announcement by Prime Minister George Papandreou sent traders to the safe haven of the U.S. dollar.
Papandreou’s unexpected call for a public vote on the aid package came just days before the leaders of the world’s largest industrial and developing nations gather for the G20 economic summit in Cannes, France on Thursday and Friday.
Investors worry Greeks are fed up following a string of painful tax increases and drastic government spending cuts and will vote against an economic austerity plan, which could in turn result in havoc in the region’s financial sector and even tend to push the global economy back into recession.
The announcement also came just five days after European officials outlined a plan to deal with the fact that Greece cannot pay its debts on time. The three-pronged strategy involved boosting a bailout fund, getting private creditors to take a bigger hit on their Greek debt holdings and forcing banks to raise more capital.
Market optimism about the plan had already started to wear thin Monday as analysts looked for more specific details on how the plan would work.
The TSX energy sector gained as Suncor Energy gained 87 cents to $31.79 while Cenovus Energy climbed 64 cents to $34.09.
Metal prices advanced as the December copper contract on the Nymex gained eight cents to $3.58 U.S. a pound, pushing the mining sector up. Teck Resources advanced 96 cents to $39.05 and First Quantum Minerals rose 77 cents to $20.50.
The gold sector rose as Barrick Gold Corp. rose 88 cents to $51.18 and Goldcorp Inc. climbed $1.40 to $51.35.
The financial sector also lifted the Toronto market, with Manulife Financial ahead 13 cents to $12.55 and Scotiabank gained 90 cents to $51.97.
In earnings news, Talisman Energy Inc. shares gained 42 cents to $14.19 as it reported that its net income jumped by nearly half in the latest quarter to $521 million as the company generated from higher prices and output. Revenues rose 17% to nearly $1.95 billion.
Shares in Canada’s fourth-largest insurer, Industrial Alliance Insurance and Financial Services Inc. fell $3.52 or 10.9% to $28.76. The company saw its profits take a 28% battering in the third quarter as financial market turbulence and low interest rates combined to hamper profitability at its individual insurance and wealth management businesses
Toy maker Mega Brands saw its profits dip slightly in the third quarter on higher costs. The Montreal-based company said net earnings fell to $17.1 million U.S. compared to $17.4 million a year earlier. Sales rose to $133.4 million from $128.3 million. Its shares were 30 cents higher at $8.80.
Canadian-American beer producer Molson Coors said third-quarter net income tumbled 23% to $197.4 million U.S. because of higher costs, the poor economy in the United States and surprisingly weak sales in the U.K. Its shares were down $1.80 to $40.00.
ON BAYSTREET
The TSX Venture Exchange gained 33.16 points to 1,622.04, while the Nasdaq Canada index nipped up 1.31 points to 420.57
All but three of the 14 Toronto subgroups remained in positive country through the day, with metals and mining stocks leading the way, up 3.1%, global base metals up 2.5%, and materials moving up 1.9%
The three laggards were consumer staples, down 0.4%, consumer discretionaries, off 0.2%, and health-care stocks, flatlining 0.04%.
ON WALLSTREET
In New York, stocks remained sharply higher Wednesday afternoon, snapping back from two days of steep declines, as investors weighed the Federal Reserve's latest economic outlook
The Dow Jones Industrials leaped 178.08 points, or 1.5%, to finish the day at 11,836
The S&P 500 jumped 19.62 points to 1,237.90, while the Nasdaq Composite Index improved 33.02 points to 2,639.98.
The rebound wasn't that unexpected, given the indexes 5% drop over the past two days.
Stocks got an afternoon boost following Fed chairman Ben Bernanke's press conference. While the Fed trimmed its economic growth outlook to between 1.6% and 1.7% for 2011, Bernanke also reiterated that the Fed is "prepared to take further action" to sustain the economic recovery.
Investors also continued to watch developments in Greece with a cautious eye (see above)
Sony shares fell after the company posted results that fell short of analysts' expectations. The electronic maker's loss was attributed to the decline to the flood in Thailand and lack of demand for its LCD TV.
Time Warner, the parent company of CNNMoney, beat analysts' expectations, but shares declined slightly. Combatant Mastercard shares rose on a healthy rise in earnings. Kraft Foods will report its quarterly earnings after the market close.
Shares of MF Global plunged more than 80% on the Pink Sheets, which allow for trading in certain stocks that are not listed on an exchange or the Nasdaq. Trading of MF Global on the New York Stock Exchange was halted on Monday when the firm was forced into bankruptcy.
On the economic front, ADP reported a jump in private-sector payrolls in October and revised its previous month higher. ADP's new September figure showed an increase of 116,000 jobs, up from the earlier report of 91,000.
Separately, a jobs report from outplacement consulting firm Challenger, Gray & Christmas showed planned layoffs dropped 63% to 42,759 in October from the prior month.
The two reports stack up ahead of the government's monthly jobs report due on Friday. Economists expect that employers added 85,000 jobs in October, keeping the unemployment rate steady at 9.1%.
The price on the benchmark 10-year U.S. Treasury retreated, raising the yield to 2.01% from 2% late Tuesday. Treasury prices and yields move in opposite directions.
Oil for October delivery acquired 23 cents to $92.42 U.S. a barrel
Gold futures for December delivery rose $17.80 to settle at $1,729.60 U.S. an ounce.
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