News Column

Stocks perk on China news

July 16, 2014



BofC leaves rates alone







Equity markets in Toronto advanced on Wednesday as positive economic data from China helped boost commodity prices and shares in the natural resource sectors.

The S&P/TSX composite index leaped 145.02 points, or nearly 1%, to close at 15,226.34.

The Canadian dollar forged ahead 0.09 cents to 93.04 cents U.S.

The index is up nearly 12% this year, but some investors are worried about valuations getting extended and the likelihood of a possible correction.

Financials added strength as Bank of Nova Scotia gained 0.6% to

$73.22. Royal Bank also climbed 0.6% to $79.70.


Shares of energy producers reflected a rise in the price of U.S. crude oil. Suncor Energy surged 1.2% to $44.72, and Canadian Natural Resources rose 1.5% to $48.14.

The gold-mining sector rebounded with the bullion price after sharp declines in the previous two sessions. Goldcorp advanced 1.4% to $29.43, and Barrick Gold jumped 2.9% to $20.28.

Barrick also let the word get out that Chief Executive Officer Jamie Sokalsky would step down on Sept. 15.


BlackBerry shares tumbled 11.7%, to $10.72, a day after IBM said it planned to partner with Apple Inc to sell iPhones and iPads loaded with applications geared to business users.

China's economic growth picked up slightly in the second quarter, topping market expectations, as it benefited from the government's stimulus measures.

Back home, the Bank of Canada announced this morning that it is standing pat on its overnight rate at 1%. The bank rate is 1.25% and the deposit rate is 0.75%

Elsewhere on the economic front, Statistics Canada reported this morning that manufacturing sales rose 1.6% to $51.6 billion in May, the fourth increase in five months.

ON BAYSTREET

The TSX Venture Exchange gained 2.72 points to 1,009.29.

All but one of the 14 Toronto subgroups were higher, with gold up 1.7%, global base metals advancing 1.5%, and telecoms improving 1.4%,

The lone laggard was information technology, down 2%.

ON WALLSTREET

Worries over possible bubbles in biotech and social media stocks quickly faded, sending stocks to record highs on Wednesday.

The Dow Jones Industrials moved forward 77.52 points to yet another all-time high of 17,138.20 by the close of business Wednesday.

The S&P 500 surged 8.29 points to 1,981.57, and the NASDAQ composite took on 9.58 points to 4,425.97

The S&P 500 also flirted with its 26th record close of the year. The broad index would have to finish above 1,985 for that to happen and earlier it was just a few points away.

Rupert Murdoch shook up the media world today.

Time Warner shares surged 18% to 13-year highs after the owner of HBO and CNNMoney confirmed it received and rejected a takeover offer from Murdoch's 21st Century Fox.

Shares of 21st Century Fox, which also owns Fox News and The Wall Street Journal, dropped almost 5% on the M&A buzz. While Time Warner rebuffed the buyout, stay tuned for more drama in this emerging story.

In the meantime, the Time Warner bid drove up prices of other media stocks, including Discovery Communication, Viacom, CBS, Comcast, Walt Disney and Scripps Networks Interactive

In the tech world, shares of both IBM and Apple floated higher after they announced they would join forces to offer iPhones and iPads pre-loaded with special software developed by IBM. The alliance drove down shares of BlackBerry by 9%.

Earnings continue to impress largely. Intel Corp popped 8% after the chip maker posted earnings that beat expectations and announced plans to boost its share repurchase program by $20 billion. Intel is now the top performing stock in the Dow for 2014.

Unlike many of its rivals, Bank of America Corp fell 2% after reporting a big drop in second-quarter earnings. While its profits exceeded expectations, BofA disclosed a $4-billion U.S. legal charge, showing the bank continues to be dogged by legal headaches.

Speaking of bank headaches, PNC dropped 3.5% after reporting a slight drop in profits and revenue.

Over in the tech world, Yahoo slid 5% in the wake of reporting second quarter revenue and profits that missed forecasts.

After the closing bell, e-commerce giant eBay Inc and Taco Bell owner Yum! Brands are scheduled to hit the earnings stage.

Investors focused on a number of positives, including stronger growth in China, a string of upbeat earnings reports and M&A chatter about the media sector.

The world's second biggest economy grew by 7.5% compared with the same period last year, despite continued worries about a slowdown in real estate. It was the first time the economy has accelerated in three quarters, putting China on a somewhat better footing to reach its official growth target of 7.5% for 2014.

Prices for 10-year U.S. Treasuries regained some strength, lowering yields to 2.54% from Tuesday's 2.55%. Treasury prices and yields move in opposite directions.

Oil prices gained $1.29 to $101.35 U.S. a barrel.

Gold prices added 80 cents to $1,297.90 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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