TSX cloSeS flaT in lackluSTre week

TORONTO • The Toronto stock market closed flat on Friday to cap off a lacklustre week as concerns about the future of the U.S. Federal Reserve’s monetary stimulus helped weigh on the TSX.

The S&P/TSX composite index edged up 3.01 points to 13,478.34, led by rising industrial and financial stocks.

The Canadian dollar was off the worst levels of the day amid data showing a better-than-expected read on retail sales and very low pressure on prices.

But the loonie still finished down US0.03¢ to US95.02¢ as Statistics Canada reported that October retail sales rose 1%, much higher than the 0.3% gain that economists had expected. But excluding autos, sales were flat against an expected 0.2% rise.

On the inflation front, the agency reported that consumer prices rose at an annual rate of 0.7% in October, down from 1.1% in September and lower than the 0.9% rate that had been expected.

U.S. indexes were up, with both the Dow industrial average and the S& P 500 finishing at fresh record highs. The Dow was ahead 54.78 points to 16,064.77 and the S&P 500 climbed 8.91 points to 1,804.76. Nasdaq was 22.49 points higher at 3,991.65.

The small advance came a day after the Dow closed above 16,000 for the first time amid data showing that jobless insurance applications are back almost to where they were before the Great Recession.

At the same time, there was another round of concern about stimulus after minutes from the Fed’s latest meeting suggested the U.S. central bank will start reducing its US$85-billion of monthly bond purchases in coming months. The content of the minutes may have come as a surprise to markets after Janet Yellen, who is slated to become the next Fed chairwoman, had expressed strong support for low interestrate and bond-buying policies during her confirmation hearing last week.

This third round of quantitative easing has kept interest rates low to support a slow but steady economic recovery in the U.S. but also propelled money into higheryielding stocks.

The Dow is up 22% year to date. If it holds those gains through December, the Dow will have had its best year since 2003.

The TSX is only up a bit over 8% on the year. The TSX ended the week flat as slides in miners, particularly gold stocks, cancelled out rising financial and energy stocks. The industrials sector led advancers Friday, up 0.5%, and financials were also positive.

The gold sector had been up as much as 2% in the morning but ended up down about 1% to lead decliners. The sector is by far the worst TSX performer, down over 7% this week and about 47% year to date as low inflation and the rising probability of Fed tapering have lessened gold’s allure as a hedge.

December bullion climbed US50¢ to US$1,244.10 Friday, but was still down 3.4% for the week. The base metals component fell 0.8% while December copper rose US2¢ to US$3.21 a pound.

The energy component was down 0.2% with January crude on the New York Mercantile Exchange off US60¢ at US$94.84 a barrel.