The Toronto stock market was higher Monday as metal prices advanced and traders continued to buy up beaten-down mining stocks.
Traders also looked to a busy earnings week for Canadian corporations.
The S&P/TSX composite index gained 63.86 points to 12,748.99 on top of four straight weeks of gains.
The Canadian dollar was ahead 0.24 of a cent to 96.7 cents US.
U.S. indexes were slightly higher amid an earnings disappointment from McDonald’s and some weakness from the housing sector as the Dow Jones industrials gained 18.55 points to 15,562.29, the Nasdaq was 9.07 points higher to 3,596.68, while the S&P 500 index rose 3.51 points to 1,695.6.
Earnings at U.S. companies have for the most part shown more positive surprises than disappointments.
But McDonald’s fell short of expectations as the world’s biggest fast food purveyor said second-quarter profit rose to $1.4-billion (U.S.), or $1.38 a share, from $1.35-billion, or $1.32 a share, a year earlier. Sales rose two per cent to $7.08-billion. Analysts had expected earnings of $1.40 a share on sales of $7.08-billion. Don Thompson, president and chief executive officer, said he expects the results for the rest of 2013 “to remain challenged” and shares of McDonald’s fell about three per cent.
In Canada, traders will take in earnings from Canadian National Railway after the close while Canadian Pacific reports Wednesday. Traders expect both railways to post strong results despite a slowdown in June volume for grain and coal carloads in Canada. At the same time, both railways have benefited from higher shipments of crude oil. But they could be faced with more stringent regulations about moving crude following the rail disaster at Lac-Megantic, Que., that claimed almost 50 lives.
Analysts expect CN to post earnings per share of $1.63, up from $1.44 a year earlier. CN is expected to report that earnings ex-items came in at $1.62, up from $1.50 a year ago. Revenue is expected to come in at $2.7-billion, rising from $2.54-billion a year ago. In early trading, CN shares shed early gains and slipped 19 cents to $105.36.
On the economic front, existing home sales fell by 1.2 per cent in June to a seasonally adjusted annual rate of 5.08 million in June but remain near a 3-1/2 year high. Economists had expected a rise of 1.4 per cent.
A lower dollar helped support commodity prices because a weaker greenback makes it less expensive for holders of other currencies to buy oil and metals which are dollar-denominated.
The gold sector continued to claw back some of the steep losses racked up so far this year, with the component up about 5.3 per cent while August bullion ran up $33.80 to about a five-week high of $1,326.70 an ounce.
“Gold stocks have come down so much, and we have a bit of a rally in gold prices and people are starting to move in and say these things got oversold,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
“I think something like a Goldcorp is sort of implying a price of $800 an ounce, which is way too low. Could it get there? Sure, in a real bear market, but I think in general the stocks have come down percentage-wise much greater than the bullion.”
The TSX global gold sector is still down 41 per cent year to date, but it earlier had been down about 50 per cent, while the price of bullion is only down 23 per cent so far in 2013.
Barrick Gold Corp. ran up 98 cents to C$18.14 while Goldcorp Inc. improved by $1.49 to $29.83.
The base metals sector was ahead 1.3 per cent while September copper was up five cents to $3.19 a pound. Teck Resources gained 38 cents to $23.86. Teck is the biggest Canadian mining company to report this week and analysts forecast the Vancouver-based company will post adjusted earnings of 33 cents a share on Thursday, down from 53 cents a year ago.
The energy sector was flat per cent higher while the September crude contract on the New York Mercantile Exchange shed early gains and was down 43 cents to $107.44 a barrel.
But prices have jumped about 12 per cent this month, underpinned by three weeks of declining U.S. stockpiles. Rising prices have lifted TSX energy stocks and the sector has gained more than five per cent this month. Cenovus Energy, which reports earnings Wednesday, climbed 33 cents to $32.58.
The telecom sector was the biggest decliner, down 0.8 per cent. BCE Inc. 44 cents lower to $42.85 while Rogers Communications fell 42 cents to $41.66. Rogers posts its quarterly earnings on Wednesday.
In other resource sector earnings, gold miner Agnico-Eagle Mines and gas giant Encana report on Wednesday, while Husky Energy will post its results Thursday.
Outside of the resource sectors, grocer Loblaw Cos. Ltd. reports results Wednesday.
In other corporate news, Intact Financial Corp. says several recent Canadian disasters, including flooding in Alberta, the Lac-Megantic train derailment and a heavy rain storm in the Toronto area, will result in more than $270-million of losses in its second and third quarter. The Toronto-based company is one of Canada’s largest property insurers. Its shares gained $1.10 to $58.63.
European bourses were mixed with London’s FTSE 100 index off 0.16 per cent, Frankfurt’s DAX edged up 0.04 per cent while the Paris CAC 40 added 0.36 per cent.