The Toronto stock market moved slightly higher Thursday amid concerns about the role of central banks in supporting the economic recovery and a forecast of lower than expected growth by the World Bank.
The S&P/TSX composite index edged up 22.48 points to 12,132.37, off early lows as miners, financials and tech stocks all turned positive. The Canadian dollar was ahead 0.43 of a cent to 98.35 cents US amid lower commodity prices.
U.S. indexes also turned higher amid positive readings on retail sales and claims for jobless benefits as the Dow Jones industrials climbed 29.53 points to 15,024.76. The Nasdaq rose 7.57 points to 3,408 while the S&P 500 index was up 3.66 points to 1,616.18.
The U.S. Commerce Department said that retail sales increased 0.6 per cent in May from April. That’s up from a 0.1 per cent gain the previous month and the fastest pace since February. The gain shows consumers remain resilient despite higher taxes and could drive faster growth later this year.
The April gain was led by a 1.8 per cent jump in auto sales, the biggest increase in six months.
And the number of Americans seeking unemployment benefits dropped 12,000 last week to a seasonally adjusted 334,000. The four-week average, a less volatile measure, decreased 7,250 to 345,250. Applications are a proxy for layoffs Central bank worries have pressured markets this week with the TSX registering triple-digit slides in each of the last two sessions.
Worries about central banks have been growing ever since Federal Reserve chief Ben Bernanke said on May 22 that the Fed might pull back on its US$85-billion-a-month bond-buying program, known as quantitative easing, if economic data improves, especially hiring.
The QE program has fuelled a strong rally on U.S. markets.
“The markets have become more and more dependent on the steroids that the central banks across the globe are providing,” said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory, a Raymond James company.
“And it takes more and more now for the market to become intoxicated.”
Also, Japanese media reports are saying overseas hedge funds may be dumping the country’s equities following disappointment over the Bank of Japan’s decision earlier in the week to refrain from additional monetary easing measures.
Those reports helped send Tokyo’s Nikkei 225 index plunging 6.4 per cent, while the yen strengthened 1.5 per cent against the greenback. A rising yen spells bad news for Japanese manufacturers because it will make their exports look more expensive overseas.
In April, the Bank of Japan announced a massive stimulus in an attempt to get inflation up to two per cent. The euphoria that drove the Nikkei up to five-year highs followed by wild fluctuations. The index is now around 20 per cent down from its May 23 peak, leaving the market in bear market territory.
Commodity prices were lower as the World Bank lowered its global economic-growth forecast, saying it expects expansion of only 2.2 per cent this year, down from a 2.4 per cent projection issued in January.
In its semiannual Global Economic Prospects report, the World Bank also revised lower its expectations for growth in China, Brazil and India. At the same time, it upped growth estimates for Japan and the U.S.
The base metals sector was the leading advancer, up 1.77 per cent as July copper lost three cents to US$3.19. Teck Resources was up 73 cents to $24.79.
The tech sector was also supportive as BlackBerry improved by 75 cents to $14.62.
Financials gained 0.45 per cent while TD Bank climbed 68 cents to $81.50.
Earnings news and acquisitions also provided lift for the TSX.
Empire Company Ltd. and its main subsidiary, Sobeys Inc. announced Wednesday after the close that they are buying rival Canada Safeway Ltd. for $5.8-billion in cash. Empire shares jumped $7.49 or 11.08 per cent to $75.10.
Shares in Transat A.T. Inc. ran up 75 cents or 14.12 per cent to $6.06 as the travel company posted a net loss of $22.8-million or 59 cents per share in the quarter ended April 30. On an adjusted after-tax basis, Transat lost $1.43-million or four cents per share, which was far better than the 26 cents per share loss estimated by analysts and an improvement from a loss of 64 cents per share in the second quarter of 2012.
The gold sector led TSX decliners, down 1.3 per cent as August bullion on the Nymex fell $9.40 to US$1,382.60 an ounce. Barrick Gold Corp. faded 42 cents to C$19.77.
The energy sector was off 0.37 per cent while the July crude contract on the New York Mercantile Exchange moved down 24 cents to US$95.64 a barrel. Cenovus Energy was 31 cents lower to $29.12.
European bourses were mixed with London’s FTSE 100 index down 0.11 per cent, Frankfurt’s DAX fell 0.74 per cent and the Paris CAC 40 was flat.