TSX REMAINS FLAT; BASE METALS ADVANCE
• The Toronto stock market closed with little change Monday as gold stocks continued to come back from oversold levels while strong Chinese manufacturing data that came out last week lifted base metal miners.
But the market was also pressured by declines in industrials and interest-sensitive stocks such as utilities and telecoms and closed two points lower to 12,760.3.
Traders also looked to another piece of economic data that kept speculation going over whether the U.S. Federal Reserve thinks the economy is strong enough to start backing off on some of its economic stimulus.
The U.S. Commerce Department reported that durable goods orders fell by a much greater-than-expected 7.3% in July. Economists had expected a drop of almost 4%. The showing followed a 3.9% rise in June, thanks in part to strong airplane orders.
Data released Friday showed a drop in new home sales, raising questions about the strength of the recovery in the U.S. housing market. That led to speculation that the Fed might stick with its current monetary stimulus or only reduce it very gradually.
The Canadian dollar closed down 0.02 of a cent to 95.21¢ US, well off early lows as the greenback weakened somewhat after the durable goods data.
The U.S. dollar has advanced amid growing conviction that the Federal Reserve will start cutting back on its US$85 -billion of monthly bond purchases, a move that has kept long-term rates low and supported a strong rally on many stock markets this year.
U.S. indexes were negative with the Dow Jones industrials down 64.05 points to 14,946.46, the Nasdaq off 0.22 of a point to 3,657.57 and the S&P 500 index declined 6.72 points to 1,656.78.
The base metals sector advanced 1% while September copper shed early advances to fall 3¢ to $3.32 a pound. Prices found support last week after HSBC’s purchasing managers index showed Chinese manufacturing moving back into expansion territory.
“I think the turn we have seen most recently in the TSX has benefited from (the fact that) we’re starting to see very credible signs of stabilization in Europe, signs the Chinese economy may be bottoming out (and) that speaks well to commodity demand,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“This has really put some enthusiasm and some confidence back into the global investment story that is going to continue to benefit the TSX.”
Thompson Creek Metals Co. gained 19¢ to $4.15 while First Quantum Minerals was up 48¢ at $18.83.
The gold sector was also ahead about 1% as December gold also erased early minor gains to fall $2.70 to US$1,393 an ounce. Iamgold gained 11¢ to $7.17 and Barrick Gold improved by 25¢ to $21.52.
Utilities led decliners. That component and other interest sensitive components such as telecoms have been under selling pressure while bond yields have risen since May when Fed chairman Ben Bernanke first mentioned that the central bank could start to taper its asset purchases.