Chinese trade surge boosts markets
TORONTO • The Toronto stock market closed modestly higher Wednesday as commodity prices rose amid stronger than expected trade figures from China.
The S&P/TSX composite index gained 19.5 points to 13,900.49, held back by sliding gold stocks.
The Canadian dollar was ahead 0.16 of a cent to US90.93¢.
U.S. indexes were mainly lower following substantial gains Tuesday after both houses of Congress voted to extend the U.S. debt ceiling without any spending conditions. The Dow Jones industrial average slipped 30.83 points to 15,963.94, the Nasdaq gained 10.24 points to 4201.29 while the S&P 500 was 0.49 of a point lower at 1819.26.
Markets were also relieved after the new head of the U.S. Federal Reserve vowed a continuation of low interest rates. Janet Yellen said that while she thinks the U.S. economy is strong enough to weather a cutback in a key stimulus program, rates should stay low to support a still lacklustre economy.
Meanwhile, data showed that China’s trade growth accelerated in January as imports rose 10% to $107.2 billion, up from December’s 8.3% growth. Exports rose 10.6% to $126.7 billion, more than double the previous month’s 4.3% expansion and the trade surplus widened to $31.9 billion. All three numbers beat expectations.
“Without a doubt, I think it’s a huge positive,” said John Stephenson, a portfolio manager at First Asset Funds. “We think, in general, the market looks good.”
Stephenson said that is because “the U.S. has had the best earnings season in two years, U.S. economic growth is likely to be three% plus, that translates into over 7.5% earnings growth, maybe more. And then you have share buybacks.”
There was major acquisition activity as Mexico’s Grupo Bimbo announced it is buying all the shares of Canada Bread Co. Ltd. in a deal worth $1.83-billion or $72 a share. Maple Leaf Foods Inc. currently holds 90% of Canada Bread’s outstanding shares. Maple Leaf shares slipped 14¢ to $15.70 while Canada Bread ran up $4.94 to $72.20.
On the earnings front, Air Canada posted quarterly earnings ex-items of $3-million or 1¢ a share, missing expectations of 12¢. The carrier also warned that this year’s first quarter will continue to feel the impact of weather-related costs and the effect of the lower loonie. Its shares plunged more than 20% to $6.22.
Rogers Communications Inc. fell $2.41 to $43.28 as the media and telcom company posted adjusted earnings of $347-million or 69¢ a share, missing estimates by 6¢. Revenue of $3.24-billion also missed estimates of $3.3-billion, while the company upped its quarterly dividend by 5%.
The Chinese data helped crude on the New York Mercantile Exchange climb US43¢ to US$100.37 a barrel and the energy sector led advancers, up 1.24%. Financials were also strong, up 0.69%. The base metals group climbed 0.35% while March copper gained US4¢ to US$3.26 a pound.
The gold sector was the major decliner, down about 3.25% while gold was ahead $5.20 to US$1,295.3 an ounce.