The Toronto stock market extended a rally to a second session Wednesday, helped along in large measure by gold stocks as fresh worries about the European debt crisis pushed bullion past the $1,800 U.S. mark for the first time.
The S&P/TSX Composite Index pulled ahead 89.63 points to conclude the session at 12,198.90
The Canadian dollar plunged 1.56 cents to 100.66 cents U.S., after the U.S. Federal Reserve promised Tuesday to leave interest rates ultra-low until mid-2013. Investors believe the Fed’s stance on rates likely means the Bank of Canada is in no hurry to resume hiking interest rates. Markets had until recently expected that the central bank would start moving on rates this fall.
The dollar is down sharply from a recent high of just over 106 cents at the end of last month as investors flocked to the safety of U.S. Treasurys and gold.
The main TSX index had soared 438 points Tuesday as investors bought up stocks beaten down during a market rout that carved 10 % from the TSX over the previous six sessions.
Despite the positive showing at mid-afternoon, volatility continued to rule the TSX, with the market down as much as 192 points earlier in the session.
Those concerns pushed the TSX financial sector down as TD Bank fell $1.09 to $73.93 and Royal Bank dropped 51 cents to $49.73.
The gold sector charged ahead as investors looking for a safe haven continued to push bullion prices further into record territory Barrick Gold Corp. gained $2.88, or 6.2%, to $49.72 and Goldcorp Inc. was ahead $3.30, or 7%, to $50.54.
The energy sector was also supportive. Suncor Energy gained 28 cents to $31.28 and Cenovus Energy rose 22 cents to $33.62.
The base metals sector was down as metal prices lost early gains and the September copper contract on the Nymex lost eight cents to $3.89 U.S. a pound. Thompson Creek Metals gave back 35 cents to $7.45 while First Quantum Minerals fell 70 cents to $21.73.
Copper producer Quadra FNX Mining Ltd. earned a second-quarter profit of $64 million U.S. or 33 cents a share, up from $37 million or 26 cents in the same period last year. Total revenues increased 76% to $298 million from $169 million. Its shares were down 19 cents to $12.22.
Grocery chain Metro Inc. reported that profits increased 4.1% in the third quarter to $124.9 million or $1.21 a share on a slight uptick in sales. Results missed analyst expectations by a penny and its shares slipped 35 cents at $45.60.
Quebecor Inc. said its profits fell to $55.2 million or 86 cents a share from $60.8 million a year ago as costs rose in the second quarter while the media company works on the launch of several new channels, including Sun News. Quebecor recorded revenues of $1.05 billion, a gain of $59.4 million from the same period last year and its shares gained $1.94, or 6.9%, to $30.19.
Forest products company Cascades Inc. handed in net income of $117 million in the second quarter, or $1.21 per share, a sharp improvement over the $28 million in net income a year ago. Cascades shares advanced eight cents to $5.30.
Shares in hardware retailer Rona Inc. were down 52 cents to $10.20 after the home improvement retailer said profits tumbled to $37 million, or 28 cents per share, in the second quarter compared to $66.3 million or 51 cents per share a year earlier. Revenues slipped to $1.37 billion from $1.4 billion on "very poor weather conditions."
ON BAYSTREET
The TSX Venture Exchange gained 40.90 points to 1,752.13 while the Nasdaq Canada index slid 11.03 points to 451.14
In Toronto, subgroups were evenly split between winners and losers. The former group was led by gold, which shone 4.8% brighter, while materials shot ahead 3.5% and utilities gained 1.3%.
The laggards were weighed by global base metals, off 3.4%, information technology, down 1.4%, and financials, sliding 1.3%.
ON WALLSTREET
In New York, stocks remained sharply lower Wednesday afternoon as investors digested comments from Bank of America CEO Brian Moynihan and confronted mounting fears about Europe's ongoing debt crisis.
The Dow Jones Industrials collapsed 519.83 points, or 4.6%, to 10,719.90
The S&P 500 gave back 51.77 points to 1,120.76, while the Nasdaq stumbled 101.47 to 2,381.05
During the last month, stocks have lost more than 14%.
The market's yo-yo action tends to spoil confidence among investors, and in turn, that lack of faith fuels additional volatility.
Stocks erased some losses after BofA chief Moynihan said conditions at the bank and in the country are much better than they were four years ago, when the financial crisis hit, during a call hosted by investor Bruce Berkowitz of Fairholme Capital Management.
After briefly recovering, shares of Dow component BofA were down 8%.
Along with BofA's problems, investors remains worried about the Europe's ongoing sovereign debt crisis.
Ever since Standard & Poor's stripped the U.S. of its AAA credit rating Friday, fears have been building that rating agencies may also downgrade AAA-rated nations in Europe, since they are also struggling with massive debt problems.
Financial stocks led the selloff in U.S markets, as investors worried that trouble in the European banking sector could spill over into the U.S. banks.
Shares of Citigroup, Goldman Sachs and Morgan Stanley dropped more than 6%. Shares of Wells Fargo, UBS and JPMorgan Chase were down more than about 4%.
London-based HSBC Holdings sold its U.S. credit card arm to Capital One for $2.6 billion U.S. Shares of HSBC slipped 5%, while Capital One's stock gained more than 5%
Dow member and communications equipment maker Cisco Systems reports its quarterly results after the closing bell. Analysts are looking for it to report a profit of 38 cents U.S. a share, according to Thomson Reuters.
Media giant News Corp., which has recently been in the news due to its alleged part in the U.K.'s phone hacking scandal, also reports after the closing bell.
Economically speaking, the U.S. government said wholesale inventories rose 0.6% in June, less than forecasts for a 1% rise.
Prices on the 10-year Treasury note rose sharply, correspondingly lowering yields to 2.14% from Tuesday’s 2.18%. Prices and yields move in opposite directions.
Oil for September delivery regained $2.77 to $82.07 U.S. a barrel
Gold futures for December delivery gained $45.30 to settle at $1,788.30 U.S. an ounce. Earlier, gold futures hit an intraday high of $1,801 U.S. per ounce.
