Gold boosts TSX, New York mixed
• The Toronto stock market closed higher Tuesday, helped along by gold stocks which continued to recover from a severe battering earlier in the summer.
However, economic concerns pressured oil prices and traders awaited more clarity on what the Federal Reserve may decide to do about cutting back on a key stimulus measure.
The S&P/TSX composite index gained 82.09 points to 12,670.11, making up a bit more than half of Monday’s 149-point slide. The Canadian dollar was down 0.43 of a cent to US96.26¢.
New York indexes were mixed amid better than expected earnings from retailers Best Buy, Home Depot and J.C. Penny.
The Dow Jones industrials gave up early gains to lose 7.75 points to 15,002.99, the Nasdaq gained 24.5 points to 3613.59 while the S&P 500 index added 6.29 points to 1652.35.
Traders looked ahead to Wednesday and the release of the minutes from the Fed’s most recent meeting at the end of last month. A largely positive run of economic data has persuaded many investors that the central bank will start to taper its monthly bond purchases of US$85-billion, starting as early as September. The stimulus program has kept long term rates low and encouraged a sharp run-up on many markets this year.
“Clearly this whole debate about whether we see the onset of tapering in September has taken centre stage,” said Garey Aitken, chief investment officer at Bissett Investment Management in Calgary, who also pointed out that seasonality is playing a part.
“We’re in the summer doldrums, we’re out of earnings season … so what is everybody focused on? You focus on what’s in front of you. So it’s probably got a bit more of a pronounced effect.”
The TSX gold sector ran up about 3.75% while gold ticked $6.90 higher to US$1,372.60 an ounce.
The sector was punished along with gold prices after Fed chairman Ben Bernanke first mentioned the possibility of the Fed cutting back in May. It hit a recent low in late June, leaving the gold sector down about 50% year to date. It has since improved and the sector is down about 30% so far in 2013.
“We’ve seen a kind of natural bounce back from probably overdone levels with the producers — we’ve seen a better gold price in the last five or six weeks,” Mr. Aitken said. “Those producers fell more than the price of gold had declined.” Goldcorp Inc. gained 86¢ to $32.89. The utilities sector also provided lift, up 0.75%. Utilities and other interest-sensitive stocks have been a major drag as the prospect of the Fed tapering its massive bond purchases has sent U.S. bond yields higher.
The benchmark U.S. 10-year treasury was off 0.06 of a point from late Monday at 2.82%. Still, bond yields have surged well over a full percentage point since Mr. Bernanke’s remarks in May. Just Energy Group gained 16¢ to $6.32.
Speculation over Fed intentions pushed crude oil down US$2.14 to US$104.96 a barrel. Canadian Natural Resources gained 29¢ to $30.96.