TSX riSeS deSpiTe weak earningS
• The Toronto stock market registered a solid gain Tuesday as investors continued to pick up beaten-down mining stocks and took in two disappointing earnings reports from the retail sector.
The S&P/TSX composite index was up 88.22 points to 12,297.09.
The Canadian dollar was ahead 0.31 of a cent at US95¢ amid data showing that Canadian housing starts came in at an annualized rate of 199,586 units in June, a decrease from 204,616 in May. That was much better than the reading of 190,000 starts that analysts had been expecting.
U.S. indexes also advanced as Alcoa Inc., the first Dow component to report its second-quarter results, failed to benefit from quarterly earnings that beat revenue and profit expectations.
Alcoa said after the close of markets Monday that it earned 7¢ a share, a penny better than forecast. Revenue came in at $5.85 billion, surpassing expectations of $5.8 billion. However, its stock lost early momentum and slipped a penny to US$7.91.
“Does anyone really care about an aluminum company?” said Gareth Watson, vicepresident at Richardson GMP Ltd.
“Right now, the market’s attention is not on base metal stocks. So even if it has a good report, I think people are putting their money into interest sensitive and dividend yielding stocks, and if they are getting cyclical, they’re doing it in other areas such as industrials.”
The Dow Jones industrials advanced 75.65 points 15,300.34, the Nasdaq gained 19.43 points to 3,504.26 and the S&P 500 index was ahead 11.86 points at 1,652.32.
Mining stocks benefited from bargain hunting for a second day.
Falling demand for resources has pushed the TSX base metals sector down 32% so far this year. The gold sector has fared much worse, down 47% year to date as the Federal Reserve signalled it could start tapering its economic stimulus program of bond purchases later in the year while inflationary pressures remain tame.
On Tuesday, the base metals sector was ahead 2.67% even as copper prices fell further on demand concerns, with the September contract down 3¢ to US$3.06 a pound. HudBay Minerals climbed 19¢ to C$6.83 and Teck Resources advanced $1.21 to $22.39.
Railway stocks advanced alongside mining stocks after losing some ground Monday amid questions about the transport of crude oil in the wake of a derailment over the weekend in Lac-Megantic, Que., killing at least 15 people and leaving about 35 more missing. Canadian National Railway rose $1.21 to $103.94, while Canadian Pacific climbed $1.79 to $128.48.
The gold sector rose about 0.9% as gold prices rose slightly with the August bullion contract in New York ahead $11 to US$1,245.90. Eldorado Gold gained 18¢ to C$6.41, while Goldcorp Inc. ran ahead 56¢ to $25.47.
The energy sector also provided lift, up 1.1% as the August crude oil contract on the New York Mercantile Exchange advanced 39¢ to a 14-month high of $103.53 a barrel due to tensions in Egypt. Canadian Oil Sands fell 97¢ to C$19.81, while Imperial Oil improved by 80¢ to $42.58.