News Column

Toronto down at noon

August 22, 2014



Inflation, retail sales revealed







The Toronto stock market was slightly lower Friday morning as U.S. Federal Reserve chairwoman Janet Yellen offered no signal that she's altered her view that the economy still needs Fed support from interest rates that have been near zero since the financial crisis.

The S&P/TSX composite index was down 27.25 points to greet noon at 15,528.84

The Canadian dollar was down 0.06 cents at 91.34 cents U.S.

Royal Bank posted a record $2.38-billion profit in its third quarter, up 4% from a year earlier.

Canada's largest bank said the profit amounted to $1.59 per share under standard reporting and $1.64 per share on an adjusted basis.

Analysts had generally estimated Royal would have $1.54 per share of net income and $1.56 per share on an adjusted basis.

Royal Bank also increased its quarterly dividend by four cents to 75 cents a share. Its shares were down 86 cents to $80.80 at noon but earlier hit an all-time high of $82.15. Its stock has surged more than 13% this year.

The TSX energy sector declined, as Imperial Oil slipped 16 cents to $56.59.

The base metals component gained ground as September copper rose three cents to $3.20 U.S. a pound. Teck Resources added three cents to $25.05.

The gold sector was flat as Barrick Gold settled six cents to $20.12.

On the economic front, Statistics Canada reported this morning that inflation dipped some last month. Consumer prices rose 2.1% in the 12 months to July, following a 2.4% increase in June. But, on a seasonally-adjusted monthly basis, CPI fell 0.1% in July, after rising 0.3% in June.

The agency also told us that retail sales continued their winning streak in June, up 1.1% to $42.6 billion, to make six straight positive months.

ON BAYSTREET

The TSX Venture Exchange doffed 2.62 points to 999.58

The 14 Toronto subgroups were evenly divided between gainers and losers, information technology and consumer staples co-leading the former group, up 0.4% each, while gold inching up 0.2%.

The seven laggards were weighed by financials, down 0.5%, global base metals, off 0.4%, and energy, down 0.3%.

ON WALLSTREET

Geopolitical concerns, not today's speech by Fed chair Janet Yellen, are weighing on stocks.

The Dow Jones Industrials dropped 20.61 points to greet noon at 17,018.88

The S&P 500 faded 1.90 points to 1,990.47. The NASDAQ gained 9.91 points to 4,542.01

Still, barring a Friday shakeup, the three main indexes are on track to log weekly advances. The S&P 500 is up 1.9% for the week, the Dow is up 2.4% and the NASDAQ, 1.6%.

Women's apparel retailer Ann Inc. posted second-quarter earnings and sales that topped analysts' expectations, but offered muted third-quarter guidance. Shares fell 5%.

AÉropostale Inc. shares dropped 9% after the clothing retailer's forecast a wider-than-expected loss for the fiscal third quarter.

Apple Inc. shares were up 0.6%. The company's suppliers are struggling to get enough screens ready for the launch of the bigger-screened iPhone 6 next month, according to a report by Reuters, citing unnamed sources.

GameStop Corp. shares climbed 6% after the videogame retailer's third-quarter earnings forecast outpaced estimates.

Yellen, at her speech at the annual gathering of central bankers in Jackson Hole, Wyo., said the economy is getting closer to the Fed's goals of full employment and stable inflation, and the debate at the central bank is “naturally shifting” to debating when the central bank should begin to raise interest rates.

Balancing this more hawkish tone, Yellen said that 19 labour market indicators followed by the Fed suggest that the decline in the unemployment rate overstates the improvement in overall labor market conditions.

Minutes of the Fed's meeting in July, released this week, showed senior officials are becoming increasingly divided on how fast the labour market is improving. But many Fed policy makers believe more improvement is needed before they begin raising interest rates.

Stocks traded roughly flat after Yellen's speech, then slumped to session lows after reports said NATO viewed a buildup of Russian forces near Ukraine as alarming, and the organization condemned the entry of a Russian convoy into Ukraine.

Prices for 10-year U.S. Treasuries gained strength, lowering yields back to Thursday's 2.41%. Treasury prices and yields move in opposite directions.

Oil prices dipped 94 cents to $93.02 U.S. a barrel.

Gold prices gained $5.90 to $1,281.30 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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