The Toronto stock market was higher Monday amid rising metal prices, while traders also looked to the kickoff of the second-quarter earnings season in the U.S. with results from resource giant Alcoa Inc.
The S&P/TSX composite index advanced 58.25 points to 12,193.16.
The Canadian dollar was up 0.07 of a cent to 94.7 cents US amid data showing surprising strength in the Canadian housing sector in May. Statistics Canada reported that building permits worth $7.3-billion were issued in May, up 4.5 per cent from April. Economists had expected a drop in the neighbourhood of 10 per cent.
U.S. indexes ran ahead, building on strong gains from the end of last week after job creation figures from June blew past expectations.
The Dow Jones industrials gained 91.08 points to 15,226.92, the Nasdaq was ahead 4.45 points at 3,483.83 and the S&P 500 index advanced 9.27 points to 1,641.16.
Analysts at FactSet expect Alcoa to post quarterly earnings of six cents a share and revenue of $5.85-billion (U.S.) after the market close. The aluminum giant earned six cents a share on revenue of $5.96-billion a year ago.
Alcoa’s debt rating was downgraded to junk by Moody’s Investors Service on May 29, cutting the rating by one notch to Ba1 from Baa3 with a stable outlook. Moody’s cited weaker aluminum demand on slower growth in China and a recession in Europe for the move. Alcoa stock inched up six cents to $7.87.
Most TSX sectors were higher but the industrials group declined and railway stocks were lower amid questions being asked about the transporting of crude oil in the wake of a derailment over the weekend in Lac-Megantic, Que., that killed at least five people.
“The multiple is exponential, the amount of oil that is now being shipped by rail versus just even five years ago (and) it’s been very accretive to earnings,” said Paul Vaillancourt, managing director at Fiera Capital in Calgary.
“It’s very tragic but at the end of the day we don’t think that the railway stocks are going to get crushed on this. One could argue that pipelines could offer a safer alternative and that’s maybe the viewpoint that a lot of people in Calgary here.”
Canadian National Railway was down 61 cents to $102.85 and Canadian Pacific was off $1.52 to $125.69. Meanwhile, stock in pipeline company TransCanada gained 64 cents to $46.23.
TSX advancers were led by a one per cent rise in the utilities sector. The group, like other interest sensitive sectors, has been under selling pressure since late May when U.S. Federal Reserve chairman Ben Bernanke suggested that the central bank could taper its program of bond purchases. His remarks had the effect of pushing bond yields higher. The benchmark U.S. 10-year Treasury has jumped to around 2.7 per cent, up about a full percentage point from May.
“Any of the interest sensitive sectors that have been beat up are rallying a bit this morning,” Vaillancourt said.
Just Energy Group improved by 20 cents to $6.35.
The base metals sector was up about 0.9 per cent while copper prices edged up three cents to $3.10 a pound after sliding 11 cents on Friday. Turquoise Hill Resources rose 47 cents to $6.24.
Oil prices were lower after unrest in Egypt helped push the price of crude up seven per cent last week. The August crude contract on the New York Mercantile Exchange declined 27 cents to $102.95 a barrel. The energy sector climbed 0.76 per cent and Imperial Oil gained 45 cents to $41.71.
Financials also provided lift with the sector ahead 0.72 per cent. Manulife Financial gained 54 cents to a new 52-week high of $17.78.
The gold sector rose 0.57 per cent as gold prices headed higher amid a sign that the recent steep price drop may be coming to an end. The August bullion contract on the Nymex rose $22.50 to $1,235.20 an ounce after strategists at Deutsche Bank said much of gold’s correction may have already happened.
Prices have been particularly under pressure since the indication that Fed bond purchases could be scaled back and data showing an improving U.S. economy and tame inflationary pressures. Gold now is down more than 30 per cent from a peak of around $1,900 an ounce in September 2011.
Barrick Gold Corp. rose 36 cents to C$14.93.
In other corporate news, Italian automaker Fiat has exercised a third option to buy a small amount of Chrysler stock. But the sale won’t go through until a price dispute is settled by a judge. Fiat says it offered $254.7-million for another 3.3 per cent of Chrysler’s outstanding equity. Fiat now owns 58.5 per cent of Chrysler and wants to ultimately buy the remaining 41.5 per cent from a health-care trust owned by the United Auto Workers.
European bourses were higher amid news that Greece’s international creditors appeared to have reached a deal with the cash-strapped country over further economic reforms required for the release of bailout funds. A meeting later in the day of the finance ministers of the 17 European Union countries that use the euro is expected to confirm the release.
London’s FTSE 100 index edged up 0.8 per cent, Frankfurt’s DAX gained 2.38 per cent and the Paris CAC 40 ran ahead 1.77 per cent.