The Toronto stock market ran ahead more than 100 points mid-afternoon Tuesday, led by rising bank stocks in the wake of an earnings report from Bank of Montreal that beat expectations.
The S&P/TSX composite index climbed 100.25 points on the day to 11,828.31.
Canada's central bank reiterated that it will likely leave its policy rates at that level until the end of the second quarter. But it also warned that "the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada."
The TSX financial sector was stronger, as Bank of Montreal reported a $657-million profit in its fiscal first quarter, up from $225 million a year ago. Its total revenue increased by 24% from a year earlier to $3.02 billion, with its Canadian operations accounting for most of the growth.
BMO also reduced provisions for credit losses by $95 million to $333 million. Bank of Montreal said cash earnings per share came in at $1.13, easily beating analyst expectations of $1.03 and its shares were up $2.25 to $58.89.
Shares in Royal Bank, which hands in earnings results on Wednesday, climbed 89 cents to $58.24.
CIBC and National Bank also delivered positive earnings results last week. The Commerce jumped in price $1.32 to $72.25, while National shares prospered 36 cents to $62.10.
Elsewhere in the financial sector, securities firm GMP Capital Inc. had a $19.5-million profit in the fourth quarter of 2009, as the firm more than tripled its revenue compared with the final three months of the prior year. GMP’s net income was the equivalent of 28 cents per share, much higher than the 17 cents a share that analysts had expected. Its shares rose 48 cents to $13.40.
The market also found strong support from the commodity sector.
The energy sector was ahead as Suncor Inc. improved 51 cents to $31.10 and EnCana Corp. climbed 37 cents to $35.68.
The Gold Index grew in strength, as Barrick Gold Corp. was ahead 90 cents to $40.95, while Goldcorp Inc. rose 71 cents to $40.73.
The base metals sector gained ground while May copper was ahead six cents at $3.41 U.S. a pound.
Sherritt International advanced 30 cents to $7.80 while HudBay Minerals rose nine cents to $13.76.
Merger activity also lifted stocks. CF Industries made another offer for fertilizer maker Terra Industries, which last month agreed to be sold to Norway’s Yara for $4.1 billion U.S.
CF is itself resisting a takeover bid from Calgary-based Agrium Inc., which has been pursuing the Illinois-based company for about a year -- although on the condition that it drops the Terra bid. Agrium rose 70 cents to $69.37.
In other corporate news, PetroBakken Energy Ltd. shares were off 42 cents to $28.13 as the company continues to growing its presence in the oil-rich Pembina region of western Alberta. It has purchased an unnamed private oil and gas company for $251.4 million.
In other economic news, Canada Mortgage and Housing Corp., the national housing agency, said Tuesday that housing starts will continue to improve in the coming years. It foresees 152,000 to 189,300 units of housing starts in 2010 and expects it to improve in the range of 156,400 to 205,600 units in 2011.
The Canadian dollar gained 0.57 cents to 96.51 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups pointed upward Tuesday, hitching their respective wagons to gold’s star. Gold soared 1.6%, while materials were up 1.4%, and information technology gained 1.2%.
The three laggards included telecoms and consumer staples, each off 0.2%, and health-care issues slid 0.1%.
The TSX Venture Exchange was ahead 10.54 points to 1,548.15, while the Nasdaq Canada index gained 4.28 points to 759.20.
ON WALLSTREET
In New York, equities were mostly higher Tuesday afternoon on some upbeat company news and bets that Greece won't default on its debt, as automakers reported sales figures in the wake of Toyota's big recall.
The Dow Jones industrial average inched higher 2.19 points to 10,405.98. The S&P 500 index picked up 2.60 points to 1,118.31, and the Nasdaq composite added 7.22 points to 2,280.79.
Stocks had been modestly higher throughout the session, but lost some steam in the afternoon.
A selloff in some of the Dow's tech stocks dragged on the index, with IBM, Hewlett-Packard and Microsoft among the losers. Bank stocks gave up bigger gains, cutting into a larger advance.
Stocks had gained through the afternoon with investors making tentative steps ahead of a heavy spate of economic news due later this week. The highlight is Friday's government jobs report, expected to show continued weakness in the labour market.
Worries about Greece and a broader euro-zone debt crisis caused the more than nine-month-old U.S. stock rally to halt and do an about-face in mid-January. Mixed readings on the U.S. economy added to the stock market weakness as investors worried that the recovery would not be as robust as had been hoped.
But those fears seem to have been tempered in the last few weeks, with the Dow and other major indexes rising in two of the last three weeks.
Stocks were lifted Monday by a pair of deals in the pharmaceutical sector, with the S&P 500 and the Nasdaq ending in positive territory for the year. It was the first time the major stock indexes had been on the plus side in six weeks.
The mid-January to early February selloff sent the S&P 500 down over 9% and the Dow and Nasdaq down more than 7%. But that selloff is unlikely to be the last big retreat this year, or even in the first half of the year, Halliburton said, considering the size and pace of last year's rally.
Between bottoming at a 12-year low in March of last year and hitting a 2010 high on Jan. 19, the Dow gained 64% and the S&P 500 gained 70%. After bottoming out at a six-year low last March, the Nasdaq gained 83% through Jan. 19.
Investors took some comfort Tuesday from signs that Greece's debt situation seems to be under control. Greek Prime Minister George Papandreou said more aggressive action needs to be taken to get the company's ballooning deficit under control. His government is expected to announce further initiatives Wednesday after already announcing plans to raise the retirement age and freeze salaries for civil workers.
Automakers released February vehicle sales numbers on Tuesday in the aftermath of Toyota's massive recall last month.
Toyota Motor said sales fell 9% in February versus a year ago, better than the 10% drop tracker Edmunds.com was forecasting.
Ford Motor said February sales jumped 43% from an abysmal month a year ago, the worst month for the industry in 19 years. Sales also outpaced those of General Motors for the first time in 10 years.
GM said February sales rose about 12% from a year ago, far short of estimates. GM was expected, along with the other automakers, to benefit more substantially from Toyota's ongoing problems.
Earlier GM said it had recalled 1.3 million Chevrolet and Pontiac models in North America due to power steering failures
CF Industries Holdings re-launched its bid for fellow fertilizer firm Terra Industries, offering $4.75 billion U.S. in cash and stock, after giving up its aggressive takeover attempt in January. CF jumped back into the fray after Terra agreed last month to a $4.1-billion U.S. buyout from Norway's Yara.
CF shares fell 3%, while Terra shares gained 12%.
Qualcomm said late Monday that it was hiking its dividend by 12% and that it was initiating a new $3-billion U.S. stock buyback program. Investors welcomed the news, propelling the stock of the wireless chipmaker up 6% Tuesday in active Nasdaq trading.
Kansas City Fed President Thomas Hoenig said the central bank should raise short-term interest rates sooner rather than later, even with high levels of unemployment. Hoenig said that the extended period of historically low rates raises the risk of speculative behaviour.
Hoenig, a voting member of the Fed's policy committee, was the only Fed official to vote against the group at the last Fed meeting in January, when the bankers opted to hold interest rates steady at levels near zero.
However, rates are not expected to rise for some time, as has been indicated by recent comments from Chairman Ben Bernanke and other voting members of the Fed's policy-setting committee.
Treasury prices were up slightly, lowering the yield on the 10-year note to 3.61% from Monday’s 3.62%.
The price of a barrel of oil added $1.02 to $79.72 U.S.
Gold prices shot ahead $19 to $1,137 U.S.
