GOLD MINERS LEAD TSX SOLID GAIN
TORONTO • The Toronto stock market closed higher Monday as traders picked up beaten-down gold stocks while bullion prices had their biggest one day move upward in more than a year.
The S&P/TSX composite index gained 73.25 points to 12,758.38 on top of four straight weeks of gains as traders also looked towards a busy earnings week for Canadian corporations.
The Canadian dollar was ahead 0.21 of a cent to US96.67¢.
U.S. indexes were lacklustre amid an earnings disappointment from McDonald’s and some weakness from the housing sector as the Dow Jones industrials added 1.81 points to 15,545.55, the Nasdaq was 12.78 points higher to 3,600.39, while the S&P 500 index rose 3.44 points to a new record high of 1,695.53.
Overall, earnings at U.S. companies have shown more positive surprises than disappointments.
But McDonald’s fell short of expectations Monday as the world’s biggest fastfood purveyor said second-quarter profit rose to US$1.4 billion, or $1.38 a share, from $1.35 billion, or $1.32 a share, a year earlier. Sales rose 2% to $7.08 billion.
Analysts had expected earnings of $1.40 a share on sales of $7.08 billion. Don Thompson, president and chief executive officer, said he expects the results for the rest of 2013 “to remain challenged” and shares of McDonald’s fell 2.7% to $97.58.
In Canada, Canadian National Railway reported earnings per share of $1.69, 7¢ better than forecasted and up from $1.44 a year ago.
Revenue was $2.67-billion versus the $2.7-billion that analysts had expected. CN shares had closed down 49¢ to $105.06.
Railway giant Canadian Pacific reports earnings on Wednesday.
Also after the close, online video streaming company Netflix handed in earnings of US49¢, 9¢ better than expectations. Revenue of $1.07-billion matched expectations.
The gold sector continued to claw back some of the steep losses racked up so far this year, with the component up about 6.5%, while August bullion ran up $43.10 to US$1,336 an ounce, climbing above $1,300 for first time in a month. It was the biggest one-day gain since June 2012.
“Gold stocks have come down so much, and we have a bit of a rally in gold prices and people are starting to move in and say these things got oversold,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
“I think something like a Goldcorp is sort of implying a price of $800 an ounce, which is way too low. Could it get there? Sure, in a real bear market, but I think in general, the stocks have come down percentage-wise much greater than the bullion.”
The TSX global gold sector is still down 35% year-to-date, but it earlier had been down about 50%, while the price of bullion is only down 20% so far in 2013.
Prices were close to US$1,500 an ounce in early May but started to drop later that month after Federal Reserve Chairman Ben Bernanke said the central bank could start tapering its monthly US$85 billion of bond purchases if conditions warrant.