News Column

Flat start for TSX

July 17, 2014



CP, Loblaw in focus







Stocks in Toronto were slightly higher at Thursday's open, amid a strong earnings report from Canadian Pacific Railway and mixed corporate data from the U.S.

The S&P/TSX composite index gained 20.87 points to begin the day at 15,247.21. This, after a surge of 145 points on Wednesday.

The Canadian dollar slipped 0.03 cents to 93.06 cents U.S.

Canadian Pacific posted second-quarter net income of $371 million, or $2.11 per diluted share, up 48% from a year ago and beating estimates by a penny. Revenues were ahead 12% to $1.68 billion while the key operating ratio was 65.1%, a 680-basis point improvement.

In the U.S., Morgan Stanley handily beat profit and revenue estimates for the second quarter. The bank said earnings rose 47% to $1.9 billion U.S., or 94 cents a share. Adjusted per-share earnings came to 91 cents, compared with a FactSet consensus estimate of 55 cents.

Revenue totaled $8.6 billion, compared to $8.52 billion, in the year-ago quarter, and $8.5 billion on an adjusted basis. The FactSet consensus was for revenue of $8.22 billion. Shares in the rail carrier improved $6.54, or 3.3%, at the outset to $204.37.

Late Wednesday, West Fraser Timber Co. said net income in the latest quarter was $74 million or 87 cents per share, compared with $109 million or $1.27 per share in the comparable 2013 period.

Revenue rose to $1.05 million from $900 million in the second quarter of 2013 and from $809 million in the first quarter of this year as increased shipments in its lumber operations were offset by lower prices. Shares in West Fraser were off $2.09, or 4.1%, to $49.20.

In other corporate developments, Loblaw Companies says Galen Weston will become president of the retailer as part of broader changes that shake up its management structure.

The move has Weston replacing Vicente Trius effective immediately, with the company saying that Trius plans to return to Brazil for "family reasons."

Weston was formerly executive chairman of the company, which is a longtime family business and a subsidiary of George Weston Ltd. Loblaw posts financial results on July 24. The grocer's shares were up two cents to $49.30.

Elsewhere on the economic front, Statistics Canada reported this morning that foreign investors bought up $21.4 billion of Canadian securities in May, most of them government bonds. Canadian investors added $2.0 billion of foreign securities to their holdings in the month, most of them non-U.S. instruments.

ON BAYSTREET

The TSX Venture Exchange gained 0.35 points to 1,009.64.

Nine of the 14 Toronto subgroups were lower at the beginning, as global base metals and consumer discretionary stocks each settled 0.5%, and information technology sank 0.4%.

The five gainers were led by industrials, up 1%, gold, up 0.5%, and materials, ahead 0.2%.

ON WALLSTREET

Markets experienced a pullback Thursday after the Dow Jones industrial average cruised to a new record high.

The Dow Jones Industrials dipped 15.78 points to 17,122.42.

The S&P 500 skidded 3.13 points to 1,978.14, and the NASDAQ composite waned 3.49 points to 4,422.48

Shares in SanDisk fell nearly 10% pre-market after its quarterly report disappointed investors. Fiat owner of Chrysler -- was up nearly 4% in Europe on a report that Volkswagen is thinking about a takeover. VW shares were down 2%.

Earnings season continues, with Morgan Stanley reporting results before the opening bell. The finance firm reported quarterly gains in net income and revenue, compared to the year-earlier quarter.

Shares in the bank were trading up 0.7% pre-market. Google and IBM are slated to report earnings after the close.

Economically speaking, the U.S. Labor Department reported that initial claims for jobless aid decreased by 3,000 to a seasonally adjusted 302,000 in the week ended July 12. That was less than the 310,000 figure forecast of economists surveyed by The Wall Street Journal.

Meantime, the number of housing starts and building permits issued in June declined 9.3% to a seasonally adjusted annual 893,000 million unit-pace, the lowest since September, that word from the Commerce Department.

Economists polled by Reuters had forecast starts rising to a 1.02 million-unit rate last month.

Prices for 10-year U.S. Treasuries gained ground, lowering yields to 2.50% from Wednesday's 2.54%. Treasury prices and yields move in opposite directions.

Oil prices regained $1.52 to $102.71 U.S. a barrel.

Gold prices hiked $5.90 to $1,305.70 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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