Copper price surges on Chinese outlook
Canada’s main stock index gave up early gains to close lower Tuesday, while U.S. stocks were mixed and the loonie remained flat. The Toronto Stock Exchange ended lower despite strong gains in commodities, which showed strength after copper rose from a price floor, said Dominique Barker, Portfolio Manager, CIBC Asset Management.
“One thing that has been consistent all day has been commodities, so we’ve had commodity prices up off the bottom, particularly copper.”
The September copper contract closed up six cents at US$2.81 a pound. Efforts by the Chinese government to spur economic activity is probably a key contributor to the rise, said Barker.
“I think that’s driven by some news out of China yesterday with their announcement to reduce taxes and increase infrastructure spending. So we’re seeing a readthrough on to the energy stocks, equities in Canada, as well as copper stocks in Canada.”
The S&P/TSX global base metals index was up 3.62 per cent as big copper names like Souther Copper, Lundin Mining, First Quantum Minerals all saw substantial gains.
Overall, the Toronto Stock Exchange’s S&P/TSX composite index closed down 30.71 points at 16,390.13 as losses in health, industrials and consumer staples weighed on the market.
In New York, the Dow Jones industrial average closed up 197.65 points at 25,241.94. The S&P 500 index closed up 13.42 points at 2,820.40 and the Nasdaq composite index was down 1.11 points at 7,840.77.
Gains in some U.S. markets came as many big-name companies showed strong earnings, said Barker. “Some of the reports that came out today were very supportive of a strong economy. There were beats and raises by Eli Lilly, Lockheed Martin, 3M, Google and Verizon. All announced earnings that beat expectations.”
The Canadian dollar averaged 76.01 cents US, unchanged from Monday.
The September crude contract closed up 63 cents at US$68.52 per barrel and the September natural gas contract was up two cents at US$2.72 per mmBTU. The August gold contract ended down 10 cents at US$1,225.50 an ounce.
Meanwhile, Canadian National Railway Co. has increased its earnings outlook and capital program for the year following a quarter that saw its net income increase 27 per cent in the last quarter compared with last year.
The company said Tuesday after markets that a “robust demand environment” along with its strong performance in the last quarter has the company aiming to earn $5.30 to $5.45 per adjusted diluted share this year, up from its previous guidance of $5.10 to $5.25.
CN Rail has also increased its capital program by $100 million to $3.5 billion to buy more new rail cars this year.
Earnings for the quarter ending June 30 came in at $1.31 billion, up from $1.03 billion from the same quarter last year. Adjusted diluted earnings per share were $1.51, up from $1.34 from last year.
Analysts had expected a net income of $1.02 billion and earnings per share of $1.39 according to Thomson Reuters Eikon.
Revenue came in at $3.63 billion, up from $3.22 billion in the second quarter of 2017, and above analyst expectations of $3.58 billion.
The company also said it had named Jean-Jacques Ruest as its president and chief executive. Ruest, who has held the role on an interim basis since March, was given the job of dealing with a number of operational and customer service challenges when he was installed to replace Luc Jobin as CEO of Canada’s largest railway company in March.