The Toronto stock market moved sharply higher Friday morning, as gains in the badly beaten down gold sector were more than enough to offset a 24 per cent decline in BlackBerry stock following its latest report to investors.
The S&P/TSX composite index was up 143.45 points to 12,149.23.
BlackBerry shares tumbled $3.63 to $11.42 after saying that it lost $84-million (U.S.) in the first quarter, a period when the Canadian smartphone maker launched its latest Z10 touchscreen model.
On an adjusted basis, BlackBerry had a loss of $67-million or 13 cents per share. Analysts had expected an adjusted profit of six cents per share.
Besides the unexpected loss and disappointing revenue, analysts were uphappy with a lack of specific sales figures for BlackBerry’s new smartphones.
“They’re still not telling people how well they’re doing,” said Sadiq Adatia, chief investment officer at Sun Life Global Investment.
“We had seen a lot of negativity on BlackBerry before they initially announced the new product and the product itself is actually pretty good. (But) I think people are nervous because obviously BlackBerry has not done well on the execution side and so now they’re back to that stage of, ‘I don’t trust them.“’
The Canadian dollar racked up losses throughout the morning, falling 0.62 of a cent to 94.85 cents (U.S.) even as Statistics Canada reported that gross domestic product grew by 0.1 per cent, which was in line with expectations. Year-over-year, the Canadian economy grew at an annualized rate of 1.4 per cent.
U.S. indexes were largely tepid after three days of strong gains that reflected an atmosphere of calm that seemed to have settled on markets during this week.
The Dow Jones industrials edged 8.37 points lower to 15,016.12, the Nasdaq gained 9.63 points to 3,411.49 and the S&P 500 index ticked up 0.79 of a point to 1,613.99.
Markets had initially sold off after Federal Reserve chairman Ben Bernanke had indicated June 19 that the central bank could start winding up one of its signature stimulus programs, the purchase of $85-billion (U.S.) worth of bonds every month with the aim of keeping long-term rates low.
The change in sentiment was due to a number of factors, including solid U.S. economic data and a seeming attempt by the U.S. Federal Reserve to ease investor concerns over the pace of any reduction in its monetary stimulus. The so-called tapering of the purchases raised fears because the stimulus has been one of the drivers for stocks over recent years.
Also spooking traders was a spike in bond yields with the benchmark 10-year Treasury surging from 2.25 per cent before Bernanke’s comments to as high as around 2.6 per cent. But yields backed off Thursday after three Fed officials said markets are unrealistic in their anticipation of rate hikes down the road.
Jerome Powell, a member of the Fed board based in Washington, said the spike in bond yields over the past month is “larger” than would be justified by any “reasonable reassessment” of the path of Fed policy. On Friday morning, the 10-year bond yielded 2.53 per cent, up from 2.47 per cent Thursday.
Commodity prices were mixed and the beaten up gold sector was the biggest percentage advancer, up 5.66 per cent while the August bullion contract on the Nymex erased early losses to move up $2.60 to $1,214.20 (U.S.) an ounce. Continued speculation about when the Federal Reserve may ease up on its monthly bond purchases has pushed bullion prices to three-year lows.
Gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies. Barrick Gold Corp. was ahead 88 cents to $16.45 (Cdn). The TSX gold sector is down almost 50 per cent so far this year.
The telecom sector was up 2.26 per cent with BCE Inc. up $1.37 or 3.27 per cent to $43.33 after the federal broadcast regulator OK’d a bid by its Bell subsidiary to acquire Astral Media and its suite of TV speciality channels and radio stations in a deal worth $3.4-billion. The Canadian Radio-television and Telecommunications Commission said the revised bid — in which Bell agreed to sell some of Astral’s specialty TV channels and radio stations — satisfied its concerns that the company would be too dominant in the market.
The consumer discretion sector rose 1.78 per cent as Shaw Communications Inc. said its overall quarterly net income edged up to $250-million from $248-million a year ago, although earnings per share dropped a penny to 52 cents. Revenue was up four per cent to $1.33-billion. Calgary-based Shaw also said it has been able to minimize flood-related disruptions to its infrastructure in Alberta and is on track to generate more free cash than previously expected in the current financial year. Its shares jumped $1.16 or 4.85 per cent to $25.10.
September copper was two cents higher at $3.08 (U.S.) a pound and the base metals sector moved up two per cent. First Quantum Minerals gained 50 cents to $15.75.
The energy sector was up one per cent with the August crude contract on the New York Mercantile Exchange up 38 cents to $97.43 (U.S.) a barrel. Cenovus Energy climbed 49 cents to $30.30.
European bourses were lacklustre with London’s FTSE 100 index flat. Frankfurt’s DAX dipped 0.3 per cent while the Paris CAC 40 was off 0.1 per cent.