oil, iraq conflict, U. S. SALES lift TSX
TORONTO • The Toronto stock market closed higher Thursday amid unfolding conflict in Iraq that pushed up energy prices and positive economic data from the U. S.
The S& P/ TSX composite index added 17.50 points to 14,909.63. The Canadian dollar gained US0.10¢ to US92.12¢.
In the United States, the Dow Jones industrial average dropped 109.69 points to 16,734.19, Nasdaq fell 34.30 points to 4,297.63 and the S& P 500 dipped 13.78 points to 1,930.11.
Oil prices rose after an Al- Qaeda- inspired group that has captured two key cities in Iraq vowed to invade Baghdad as well. One of those two cities, Mosul, lies in an area that is a major gateway for Iraqi oil. The uncertainty over oil supplies prompted the July crude contract on the New York Mercantile Exchange to jump US$ 2.13 to US$ 106.53 a barrel.
Portfolio manager Kash Pashootan said there is little evidence that demand for oil, particularly from China and the U. S., will rise in the medium to long term, but any kind of international conflict will raise prices.
“The market will try to trick us with rising oil prices,” said Mr. Pashootan, a vicepresident at First Avenue Advisory in Ottawa, a Raymond James company.
“But if you look at examples from earlier this year, the major driver for energy prices has been the same factor — geopolitical tension.”
The energy sector climbed 1.69% on the Toronto Stock Exchange. However, gold was the leading advancer, up by 2.73%, as bullion gained US$ 12.80 to US$ 1,273.60 an ounce. July copper declined US3¢ to US$ 3.02 a pound.
Meanwhile, there were more signs of economic improvement in the U. S., as the Commerce Department reported retail sales rose for a fourth consecutive month in May — up 0.3% amid a surge in demand for autos.
However, sales fell shy of the 0.4% increase that economists had expected.
Also, the U. S. Labor Department says weekly applications for unemployment benefits rose 4,000 to a seasonally adjusted 317,000.
In Canada, the central bank issued a warning about the country’s housing market and the high levels of consumer debt.
In its latest semi- annual review, the Bank of Canada said the housing market is showing signs of a soft landing, but it still remains the biggest domestic risk.
The comments come as Statistics Canada reported that its new housing price index rose 0.2% in April, following identical increases in both February and March.
Meanwhile, the Teranet- National Bank National composite house price index said Canadian home prices were up in May, rising 0.8% over the previous month.
On the corporate front, shares of Lululemon Athletica Inc. were hammered after it reported a lower first- quarter profit of $ 18.98- million and cut its outlook for the year. Shares in the company fell nearly than 16%, or US$ 7.05 to close at US$ 37.25 in New York despite the company announcing it plans on buying back up to US$ 450million of its shares.