News Column

Inflation, retail boosts TSX

June 20, 2014



AbbVie, Oracle in vogue







Equity markets in Canada's largest centre were little changed on Friday as a decline in shares of gold miners, which followed the bullion price lower, was offset by strength in the energy sector.

The S&P/TSX composite index dipped 2.94 points to stop for lunch hour at 15,109.28. The broader Toronto market is up about 11% so far in 2014.

The Canadian dollar vaulted 0.47 cents at 92.91 cents U.S.

Financials, the index's most heavily weighted sector, climbed slightly, with Bank of Montreal rising 0.5% to $77.73 and Royal Bank advancing 0.3% to $75.30.


Shares of energy producers gained as Suncor Energy was up 0.6% at $46.23, and Canadian Natural Resources strengthened 0.7% to $48.13.


In the gold sector, Barrick Gold Corp lost 0.5% to $19.40.

On the economic front, Statistics Canada reported that consumer prices rose 2.3% in the 12 months to May, following a 2.0% increase in April. On a seasonally-adjusted monthly basis, the Consumer Price Index increased 0.2% in May, after rising 0.3% in April.

What's more, retail sales increased for the fourth consecutive month in April, advancing 1.1% to $41.6 billion. Gains were widespread as 10 of 11 subsectors, representing 98% of retail trade, posted increases.

Lastly, the ratio of Canadian household debt to income edged down further in the first quarter from the record high it hit last year, buttressing policymakers' expectations that a soft landing is in store for the housing market and family indebtedness.

ON BAYSTREET

The TSX Venture Exchange sidled back 1.19 points to 1,020.87

The 14 Toronto subgroups were evenly split between gainers and losers, with health-care leading the former group, up 1.1%, energy better by 0.4%, and real-estate 0.2% into the green

The seven laggards were weighed by gold, down 1.2%, telecoms, worse by 0.8%, and materials, off 0.7%.

ON WALLSTREET

Friday started slow in the stock market, but things are heating up into lunch.

The Dow Jones Industrials pushed higher 35.70 points to greet noon at 16,957.16

The S&P 500 gathered 2.26 points to 1,961.74, but the NASDAQ composite fell 1.45 points to 4,357.88, dragged down by Oracle's poor performance.

AbbVie is trying to take a trip to Ireland and the U.K. this summer -- mostly to get away from U.S. taxes. But Ireland-based Shire has rejected AbbVie's unsolicited $46-billion U.S. bid for two reasons: It thinks it's undervalued and it it sees too many risks with AbbVie looking to move its tax base to the U.K. Shire shares are up 18%, and AbbVie stock is flat Friday.

Darden Restaurants reported poor earnings and gave another glimpse into why shareholders were so mad it didn't shove Olive Garden out the door when it dumped Red Lobster earlier this year.

Darden also owns Longhorn Steakhouse and smaller chains like Bahama Breeze and Capitol Grille. These restaurants reported decent sales growth. But Olive Garden, which still represents the biggest component of Darden's revenue, continues to struggle.

The stock has fallen 2.4% Friday. The extra bread sticks and salad aren't cutting it.

Oracle disappointed Wall Street on both sales and earnings, and now it's getting punished. Its stock is down about 5.5%.The culprit is new software licenses, which fell way short of the 20% growth analysts had been expecting.

Shares of Smith & Wesson are down over 10% on reports from the company that Americans are buying fewer guns.

Carmax is having a great morning after reporting stronger sales. The company said it had growth in every area of the company except warranties. It also said that it was continuing to test the waters of sub-prime auto lending after its financing division reported 9% growth. The stock is up 16%.

Coach has fallen about 3.5% so far today after the company said during its annual Investor Day that it was going to close 70 stores worldwide at a cost of as much as $300 million U.S. For context, the company said it made about $1 billion U.S. last year.

Prices for 10-year U.S. Treasuries recovered, lowering yields to Thursday's 2.62%. Treasury prices and yields move in opposite directions

Oil prices climbed 44 cents to $106.49 U.S. a barrel.

Gold prices took on $1.40 at $1,315.50 U.S. an ounce.



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Source: Baystreet Stock Market Update (Canada)