News Column

TSX at multi-year high

June 16, 2014



Oil prices chase $107







Canada's main stock index advanced to its highest in almost six years on Monday after violence in Iraq pushed up the price of oil, driving gains in the heavyweight energy sector.

The S&P/TSX composite index gained 16.32 points to greet noon at 15,017.93. It earlier hit 15,063.04, its highest level since June 19, 2008.

The Canadian dollar was up 0.05 at 92.16 cents U.S.

The benchmark index, which has climbed in 11 of the last 12 sessions, is up more than 10% this year.

Investors followed news of Sunni insurgents seizing a mainly ethnic Turkmen city in northwestern Iraq on Sunday after heavy fighting.

With the price of U.S. crude oil hovering above $107, shares of energy producers climbed 0.4 percent. Suncor Energy gained 0.9% to $46.77, and Enbridge rose 0.7% to $51.41.


Financials added strength with Royal Bank of Canada advancing 0.4% to $75.52 and Toronto Dominion Bank gaining 0.4% to $54.38.

On the economic slate, Statistics Canada reported that investors offshore added $10.1 billion of Canadian securities to their holdings, marking the highest such acquisition in a year.

Meanwhile, Canadian investment in foreign securities slowed to $2.5 billion.

Elsewhere, the Canadian Real Estate Association reported that national home sales rose 5.9% from April to May. Actual (not seasonally adjusted) activity stood 4.8% above May 2013 levels.

ON BAYSTREET

The TSX Venture Exchange remained positive 0.89 points to 998.22

Nine of the 14 Toronto subgroups were higher by midday, led by health-care, up 0.4, while consumer staples and consumer discretionary stocks were co-runners-up at 0.3%.

The five laggards were weighed most by gold, down 0.8%, real-estate, down 0.4%, and global base metals, off 0.3%.

ON WALLSTREET

The deepening turmoil in Iraq is spilling into the global financial markets.

The Dow Jones Industrials had doffed 37.69 points to greet noon at 16,738.05

The S&P 500 lost 2.75 points to 1,933.41, and the NASDAQ composite slid 4.29 points to 4,306.46

On the positive side, cheap borrowing rates and tax policy continue to drive merger and acquisition activity.

Medical device giant Medtronic unveiled a $42.9-billion U.S. takeover of Irish rival Covidien. The deal is the latest "tax inversion" combination aimed at taking advantage of relatively low tax rates in some foreign countries by relocating corporate headquarters. Covidien popped 20% on the news.

Williams Cos. spiked 23% as investors cheered the energy company's $6-billion U.S. deal to take full control of Access Midstream Partners.

In the tech world, SanDisk inked a $1.21-billion U.S. buyout of smaller data-storage company Fusion-io, representing a 21% premium on its closing price on Friday.

Level 3 Communications agreed to scoop up business ethernet provider TW Telecom for $5.7 billion U.S. in cash and stock. TW stock jumped over 8% Monday.

Yahoo retreated 5% after Alibaba, the Chinese e-commerce giant it owns a chunk of, revealed new details of its planned initial public offering. The latest documents show Alibaba's revenue growth has slowed, though it was still up 39% year-over-year.

Shares of Tesla drove 3% higher, extending its 2014 rally to 41%. Investors have largely shrugged off an initial negative reaction to Tesla's plans to share patents with competitors.

Oil prices ticked above $107 U.S. a barrel Monday amid concerns the fighting in Iraq could threaten the country's ability to export oil. Natural gas prices fell about 1%, but investors will continue to monitor for signs of higher energy costs to Western consumers and businesses.

Meanwhile, Russia said it has cut off supplies to Ukraine after negotiators failed to fix a payment dispute before a key deadline.

Manufacturing activity in the New York area gained momentum in June, a new report showed. The New York Fed's manufacturing index unexpectedly ticked up this month to 19.28 from 19.01.

Prices for 10-year U.S. Treasuries were up by midday Monday, lowering yields to 2.59% from Friday's 2.60%. Treasury prices and yields move in opposite directions

Oil prices gained 16 cents to $107.07 U.S. a barrel.

Gold prices took on $1.40 at $1,275.50 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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