News Column

Toronto lower on Chinese economic woes

May 5, 2014



Big earnings week ahead







The Toronto stock market was lower Monday as a survey showed that Chinese manufacturing shrank in April for the fourth month in a row while traders were cautious amid deteriorating conditions in Ukraine.

The S&P/TSX composite index faltered 81.05 to greet noon at 14,684.10, as the HSBC index of Chinese factory activity rose by 0.1 point to 48.1 in April, using a 100-point scale on which readings below 50 indicate contraction.

The gauge also fell short of its already weak preliminary result, raising concerns among investors that the slowdown in the world's second biggest economy is entrenched.

The Canadian dollar was stronger by 0.22 cents at 91.29 cents U.S.

The base metals sector gave back strength, while July copper was off a cent at $3.06 U.S. a pound.

Ritchie Bros. Auctioneers Inc. reports first-quarter net earnings of $14.3 million or two cents a share, up 2%. Revenues for the auctioneer of heavy equipment were down 3% to $98.6 million and its shares dropped $1.13 to $26.45.

It's a heavy earnings week in Canada where investors will take in reports from major companies including BCE Inc., Sun Life Financial, George Weston and WestJet Airlines on Tuesday.

Later in the week, there will be quarterly earnings reports from pipeline company Enbridge, Kinross Gold, Talisman Energy, Tim Hortons, Canadian Natural Resources, Canadian Tire and Valeant Pharmaceuticals.

ON BAYSTREET

The TSX Venture Exchange moved lower 3.19 points to 1,011.27

All but two of the 14 Toronto subgroups were lower by noon hour, weighed mostly by metals and mining, down 2.1%, global base metals, down 1.3%, and information technology, off 1.1%.

The two gainers were utilities, up 0.2%, while telecoms slid 0.04%.

ON WALLSTREET

Monday started as an ugly day on Wall Street, but the carnage may be contained, for now.

The Dow Jones Industrial Average rebounded 2.22 points to pause for noon hour at 16,515.11, after dropping as much as 120 points during the morning session.

The S&P 500 recovered 1.07 points to 1,882.21, and the NASDAQ composite index eked forward 4.06 points to 4,127.96.

The early pessimism might have been drive by Target's announcement Monday that Gregg Steinhafel, the chairman and CEO of Target during the retailer's massive breach of customer credit and debit card data last year, has left the company effective immediately. Chief Financial Officer John Mulligan will serve as interim CEO. Shares of the retailer slumped Monday.

Earnings season is winding down, but a few more quarterly releases remain on the docket this week. Tyson Foods shares dove after the company reported first quarter earnings that fell short of analyst estimates.

Pfizer sank after the pharmaceutical giant reported slightly better than expected earnings, but it's clear the company is struggling in its traditional drug business.

That might explain why Pfizer is so keen to buy British pharmaceutical company AstraZeneca despite that company's rejection of Pfizer's most recent offer of $106 billion U.S. on Friday.

JP Morgan shares dipped Monday after the nation's largest bank by assets said Friday that it expects a 20% drop in trading revenue in the second quarter.

On a more positive note, shares of King Digital, the maker of the hit online game Candy Crush, bounced Monday after Wall Street analysts began rating the stock. Many give it "buy" recommendations.

Salesforce.com also got a boost after receiving a favorable rating from an analyst at Deutsche Bank.

Prices for 10-year U.S. Treasuries eked lower, raising yields to 2.61% from Friday's 2.59%. Treasury prices and yields move in opposite directions.

Oil prices gave back 67 cents to $99.09 U.S. a barrel.

Gold prices remained positive $5.90 to $1,308.80 U.S. an ounce.



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Source: Baystreet Stock Market Update (Canada)


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