The Toronto stock market moved into positive territory late in Monday’s session as telecom stocks recovered a chunk of recent losses, but still felt the weight of mining stocks ahead of a slate of earnings reports.
The S&P/TSX Composite Index gained 21.14 points just before the close at 12,669.04
The Canadian dollar improved 0.24 cents to 97.48 cents U.S.
The market also found some support after Hudson's Bay Co., Canada's oldest retailer, announced that it is buying U.S. luxury retailer Saks Inc. in for $2.9 billion U.S, paying $16 U.S. per Saks share plus assumed debt.
HBC plans to keep Saks as a separate unit headquartered in New York and open seven Saks department stores in Canada. HBC's other holdings include The Bay and Lord & Taylor in the U.S. Investors liked the deal, sending HBC stock up 96 cents, or 5.8%, to $17.45.
The telecom sector led TSX gainers with Rogers Communications up 56 cents to $41.92 and Telus rose 55 cents to $31.95.
The sector lost ground last week as investors mull the effects of a possible entry into the sector by U.S. telco Verizon Communications.
Bell, Telus and Rogers are calling for Ottawa to change its policy on foreign ownership of small Canadian wireless companies. The three Canadian rivals say they have been put at an unfair disadvantage that allows foreign carriers like Verizon to buy small Canadian wireless carriers while denying them the same opportunity.
Commodity prices were mixed and the metals and mining component was the lead decliner, as September copper closed unchanged at $3.11 U.S. a pound. Teck Resources fell 41 cents to $24.70.
The base metals sector has had a positive month, up about 4% during July as investors bought into a sector badly beaten down amid weak commodities and a slow global economic rebound. The component is still down about 27% year to date and investors have been selling off miners over the last couple of sessions ahead of a slew of earnings reports coming down from the resource sector.
Expectations are low since these companies have suffered from low prices for oil and metals.
Miners reporting this week include Lundin Mining and uranium miner Cameco. Lundin shares gave back four cents Monday to $4.25, while Cameco shares dropped 76 cents to close the day at $21.13
It's a very heavy week for energy company earnings with Canadian Oil Sands, Talisman Energy. Suncor Energy and Imperial Oil posting results.
Turquoise Hill Resources fell $1.07, or 19.6%, to $4.38, a new 52-week low, as it said it's expecting a delay in developing its Oyu Tolgoi copper project in Mongolia due to the government's financing process. Turquoise Hill's primary operation is its 66% interest in the Oyu Tolgoi copper-gold-silver mine.
The energy sector drifted lower. Precision Drilling fell 30 cents to $10.05.
The gold sector was off while Franco Nevada Gold Corp. faded 57 cents to $44.43.
ON BAYSTREET
The TSX Venture Exchange dipped 0.6 points to 924.69
The 14 Toronto subgroups were evenly split between gainers and losers. Telecoms surged 0.6%, consumer discretionaries and utilities were each 0.5% stronger.
The seven laggards were weighed mostly by metals and mining stocks, down 2.1%, global base metals, down 1.5%, and energy, off 0.9%.
ON WALLSTREET
Investors took a step back Monday ahead of several events later this week that could set the tone for the rest of the summer.
The Dow Jones Industrials faded 36.86 points to end Monday at 15,522
The S&P 500 index weakened 6.32 points to 1,685.33. The NASDAQ slid 14.02 points to 3,599.14
Canadian retailer Hudson's Bay bought iconic retailer Saks in a deal worth $2.9 billion U.S (see above). Hudson's Bay owns rival luxury retailer Lord & Taylor.
Omnicom Group and Publicis Groupe announced a $35.1-billion U.S. deal to form the world's largest advertising agency. The news also lifted shares of rival advertising agency, Interpublic Group of Companies.
U.S. over-the-counter drugmaker Perrigo announced an $8.6-billion U.S. deal for Irish drugmaker Elan, a cash and stock deal that pays about a 26% premium for Elan shareholders. The Irish company was at the centre of an insider trading scandal involving a former employee of embattled hedge fund SAC Capital.
Mall operator Simon Property and casino owner Wynn Resorts both reported improved quarterly earnings, although Wynn fell short of forecasts while Simon beat estimates.
Rental car company Hertz reported results that met analysts' expectations, but shares were down more than 1%.
Shares of Intuitive Surgical Inc. gained after the medical robotics company boosted its share repurchase program.
After the closing bell, Herbalife, the multi-level marketing company that hedge fund manager Bill Ackman has attacked as a pyramid scheme, will release its second-quarter earnings.
SodaStream shares were up 2% as investors looked ahead to the company's latest earnings report Wednesday. The stock has had a strong pop this year, rising from about $45 U.S. a share to above $75 U.S. a share in May. But some traders on say the stock is too frothy.
Facebook shares have been on a tear since the social network reported strong quarterly results last week. The stock rose above $35 U.S. a share Monday and is closing in on its IPO price of $38 U.S.
Caterpillar announced plans to repurchase $1 billion U.S. worth of its own stock from French bank Société Générale, accelerating a $2-billion U.S. transaction announced in April. The move comes a few weeks after hedge fund manager Jim Chanos said he's betting against Caterpillar as the global boom in commodities draws to a close.
Despite news of corporate mergers totaling $46 billion U.S. early Monday, investors were reducing their exposure to stocks ahead of a meeting of top Federal Reserve officials later this week. The European Central Bank and Bank of England also meet this week.
While the Fed is unlikely to announce any major changes in policy this week, many investors believe the Fed will begin slowing the pace of its $85 billion-per-month bond-buying program as soon as September.
There is also a bevy of economic data on tap this week, with a report on second-quarter U.S. gross domestic product and the government's monthly jobs report.
Investors have been particularly sensitive to economic reports since the Fed has stressed that any tapering of its stimulus policies will depend on how the recovery progresses.
Prices for the 10-year U.S. Treasury dipped, raising yields to 2.58% from Friday’s 2.56%. Treasury prices and yields move in opposite directions.
Oil prices gave back 26 cents to $104.44 U.S. a barrel.
Gold prices were $8.40 higher to $1,329.20 U.S. an ounce.
