TSX advances amid strong US housing data weak Chinese profit outlook

Posted by

The Toronto stock market advanced Wednesday as commodity prices moved higher amid further evidence of a slow housing recovery in the U.S.Traders also looked to a report of a deteriorating business climate in China, a second day of testimony before Congress by U.S. Federal Reserve chairman Ben Bernanke and the release of the central bank’s so-called Beige Book, its regional study of economic conditions.The S&P/TSX composite index edged up 26.98 points to 11,598.17 while the TSX Venture Exchange added 3.34 points to 1,180.09.The Canadian dollar was up 0.02 of a cent at 98.78 cents US ahead of the release of the Bank of Canada’s Monetary Policy Report and a news conference by bank governor Mark Carney.The bank on Tuesday opted to leave interest rates unchanged at one per cent while again indicating that rates will rise in the future. It followed that up with a policy report that says the Canadian economic recovery is struggling to retain forward momentum.U.S. markets turned higher as American builders broke ground on the most new homes and apartments in nearly four years last month.The U.S. Commerce Department says that housing starts rose 6.9 per cent in June from May to a seasonally adjusted annual rate of 760,000, which beat expectations of 743,000. At the same time, the number of permits to build homes, a sign of future construction, fell 3.7 per cent to 755,000. But that’s down from May’s three-and-a-half-year high.The Dow Jones industrial average climbed 20.17 points to 12,825.71. The Nasdaq composite index was ahead 20.85 points to 2,930.89 and the S&P 500 index was up 3.6 points to 1,367.27.At the same time, some of China’s biggest corporations are warning of profit declines nearing 80 per cent.On Wednesday, Air China Ltd., one of three huge, government-owned airlines, warned that profit for the first half of the year will fall by at least half from a year earlier. State-owned ZTE Corp., one of the world’s biggest producers of telecommunications equipment, is projecting a decline of up to 80 per cent.Chinese leaders are trying to pull China out of its deepest slowdown since the 2008 crisis. Forecasters say the slowdown might have bottomed out after growth fell to a three-year low of 7.6 per cent in the second quarterThe TSX energy sector was up about 0.5 per cent as the August crude contract on the New York Mercantile Exchange gained 17 cents to US$89.39 a barrel. Canadian Natural Resources (TSX:CNQ) climbed 85 cents to $28.16.The base metals group was also ahead about 0.5 per cent as copper prices gained a penny to US$3.46 a pound. Ivanhoe Mines (TSX:IVN) improved by 20 cents to $8.48.Tech stocks also advanced as Research In Motion Ltd. (TSX:RIM) was ahead nine cents to $7.11 and CGI Group (TSX:GIB.A) climbed 21 cents to $23.87.Financials were also positive as Scotiabank (TSX:BNS) rose 32 cents to $52.37.The consumer staples sector was the leading percentage gainer, up 0.65 per cent as convenience store chain Alimentation Couche Tard (TSX:ATD.B) gained $1.07 to $48.99.The gold sector was the weakest component, down 1.25 per cent as gold faded $11.40 to US$1,578.10 an ounce. Goldcorp Inc. (TSX:G) gave back 87 cents to $33.23.On the earnings front, fertilizer company Agrium Inc. (TSX:AGU) said that it is expecting record earnings for the second quarter. The Calgary-based firm said earnings will be in the range of $5.40 to $5.50 diluted earnings per share while first half earnings will come in at a range of $6.72 to $6.82 per share. Agrium said the revised estimates are about 15 per cent higher than previously announced. Its stock moved up $2.70 to $96.61.Shares in Intel Corp., the world’s largest chipmaker, shook off early weakness to move up 58 cents to $25.96 after it said Tuesday after the close that the weak global economy is slowing its growth, and revenue for the current quarter is likely to come in below forecasts. Intel’s second-quarter net income was US$2.83 billion, or 54 cents per share, down 4.3 per cent from a year earlier, as operating expenses rose faster than revenue. Net income beat forecasts by two cents.There was further good news from the American financial sector Wednesday. Bank of America swung to a profit of US$2.1 billion or 19 cents a share in the second quarter, much better than a year ago when the bank reported it lost $9.1 billion when it paid $8.5 billion to settle claims from investors who had bought its mortgages or mortgage-backed bonds. The investors said they had been misled about the mortgages’ quality. Earnings beat analyst estimates of 16 cents a share but its stock dipped 11 cents to US$7.81.European bourses were positive with London’s FTSE 100 index up 0.52 per cent, Frankfurt’s DAX gained 0.8 per cent and the Paris CAC 40 ran up 1.41 per cent.Earlier in Asia, Hong Kong’s Hang Seng fell 1.1 per cent, South Korea’s Kospi dropped 1.5 per cent, Japan’s Nikkei 225 shed 0.3 per cent while China’s Shanghai Composite Index gained 0.4 per cent.Elsewhere in corporate news, the Holloway Lodging investment trust (TSX:HLR.UN) says it’s not going to accept any of the three strategic deals offered to it over recent months. The Halifax-based hotel operator says its board has determined that none of the offers is satisfactory. It says, however, it would be open to a strategic deal that maximizes Holloway’s value for its unitholders. Its units fell 44 cents to $3.56.

Leave a Reply

Your email address will not be published. Required fields are marked *