News Column

Toronto bounces despite euro-zone inflation worries

June 3, 2014



Industrials strongest







The Toronto stock market registered a solid gain Tuesday as further weak inflation data from the euro-zone raised expectations that the European Central Bank would take action to support a fragile recovery.

The S&P/TSX composite index gained 53.17 points to end Tuesday at 14,733.93

The Canadian dollar dropped 0.10 cents to 91.65 cents U.S.

A prominent decliner was Hudson's Bay Company, even as the retailer moved from a year-ago loss to a profit.

HBC posted first-quarter net earnings from continuing operations of $176 million or 97 cents a share, compared with a loss of $22 million or 19 cents a share in the same quarter of 2013. Retail sales jumped to $1.85 billion, up from $884 million in the same quarter last year.

Same-store sales, which are stores that have been open for at least a year, were up 2.8% year-over-year, and its shares retained almost all of Monday's 1.5% advance, losing only two cents to $17.25.

The energy sector gained momentum, as Suncor advanced 18 cents to $42.22, while Imperial Oil gained 39 cents to $54.05

The base metals component declined, while July copper declined three cents to $3.14 U.S. a pound. Teck Resources ditched 31 cents to $24.19.

In the gold sector, Barrick Gold tacked on a dime to $17.44, while Goldcorp docked eight cents to $24.91.

In other corporate developments, Element Financial Corp. will pay $1.4 billion U.S. cash to buy PHH Corp.'s North American fleet management services business. PHH Arval had about $4.6 billion U.S. of assets as of March 31, including $4 billion U.S. invested in fleet leases. Element Financial shares fell 26 cents to $13.04.

ON BAYSTREET

The TSX Venture Exchange remained positive 3.55 points to 982.02.

Nine of the 14 Toronto subgroups were up, led by industrials, ahead 0.9%, energy, jumping 0.7%, and telecoms, springing up 0.6%.

The four laggards were weighed mostly by health-care, off 0.8%, utilities, sliding 0.7%, and global base metals, off 0.2%. Information technology stocks were flat by day's end.

ON WALLSTREET

All three major U.S. stock indices fell in early trading despite better-than-anticipated data on U.S. factory orders.

The Dow Jones Industrial Average was down 21.29 points to close Tuesday at 16,722.34

The S&P 500 dropped 0.73 points to 1,924.24, and the NASDAQ composite index dipped 3.12 points to 4,234.08

All the major carmakers are reporting increased auto sales. Even GM, despite its recall troubles, said it sold 13% more cars last month than it did the same time last year, its strongest monthly report since 2008.

Investors are watching economic indicators for any unexpectedly sharp changes that could cause the U.S. Federal Reserve to alter interest rates or the pace of unwinding its bond-buying program.

In company news, Hillshire Brands shares were up about 9% on news that the food company's board of directors authorized takeover discussions with competing suitors Pilgrim's Pride and Tyson Foods.

Pilgrim's originally offered $45 U.S. a share to buy the company, and Tyson's countered with $55 U.S. a share. Though Pilgrim's offered $55 U.S. a share this morning, Hillshire stock's current $58 share price suggests bids could go higher. Pilgrim's and Tyson shares were both flat.

Krispy Kreme shares dropped after reporting earnings that were in line with expectations but sales that were much lower than Wall Street expected to see. The stock was down more than 13.5%.

Quiksilver shares fell as much as 45% this morning after a disastrous quarterly earnings report that showed the surf and beach apparel company losing much more money than analysts anticipated. The company has shed three fifths of its market valuation this year.

Dollar General shares were up more than 4% though the retailer reported an unexpectedly modest quarterly gain in sales and profit that failed to meet expectations. Financial firm Sterne Agee & Leach downgraded the stock to "hold" from "buy" and lowered its annual earnings expectations for the company.

Shares in Google were weak, down more than 1.5%, after the Wall Street Journal reported that the tech giant plans to spend over $1 billion U.S. on a "fleet of satellites" designed to improve internet access in remote areas.

Apple is having a better day at its Worldwide Developers Conference, at least according to Wall Street. Shares are up about 1%. Yesterday Apple unveiled iOS 8 and a new health and home-related software.

Economically speaking, the U.S. Census Bureau said factory orders increased 0.7% in April, a notch higher than expected and a sign that manufacturing output is continuing to improve. It's the third straight month of gains for the lagging indicator, and both orders and inventories are at their highest levels on record.

This comes after yesterday's twice-revised manufacturing index numbers that also showed expanded industrial activity in April.

Prices for 10-year U.S. Treasuries dipped again, raising yields to 2.59% from Monday's 2.53%. Treasury prices and yields move in opposite directions

Oil prices gained 30 cents to $102.77 U.S. a barrel.

Gold prices gained $2.80 to $1,246.80 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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