At midday: TSX up on commodities, U.S. data

The Canadian Press

Traders work on the floor at the New York Stock Exchange, June 27, 2013. REUTERS/Brendan McDermid (BRENDAN MCDERMID/REUTERS)

The Toronto stock market was positive Thursday as commodity prices rose and consumer, housing and employment data pointed to a stronger U.S. economy.

The S&P/TSX composite index gained 61.60 points to 12,013.50.

The Canadian dollar shed early gains as the greenback rose in value following the release of economic data, moving down 0.11 of a cent to 95.26 cents U.S.

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On the TSX, the base metals component was ahead two per cent while July copper rose a penny to $3.05 (U.S.) a pound. Teck Resources climbed 29 cents to $22.05 while First Quantum Minerals advanced 44 cents to $15.09.

The gold sector gained about 1.55 per cent as bullion prices continued to falter with the August contract down $4.30 to $1,225.50 (U.S.) an ounce.

New York indexes also advanced as the Dow Jones industrials gained 118.2 points to 15,028.33, the Nasdaq ran ahead 29.91 points to 3,406.13 while the S&P 500 index climbed 13.11 points to 1,616.37.

The Commerce Department said Thursday that consumer spending rose 0.3 per cent last month. That made up for a 0.3 per cent decline in April, which was the biggest drop since the fall of 2009. Incomes rose 0.5 per cent in May, the biggest gain since February and much better than the 0.1 per cent April increase.

The number of Americans seeking unemployment benefits fell 9,000 to a seasonally adjusted 346,000. The four-week average, a less volatile figure, declined 2,750 to a near five-year low of 345,750. Applications are a proxy for layoffs.

Also, the number of people who signed contracts to buy U.S. homes jumped in May to the highest level in more than six years. The increase points to healthy gains in home sales in the coming months. There is generally a one-to-two-month lag between a signed contract and a completed sale.

Buying sentiment was also improved after data released Wednesday showed weaker than expected U.S. growth in the first quarter, which raised hopes the Fed is in no hurry to cut back on its $85-billion (U.S.) of bond purchases each month. Figures showed the U.S. economy grew at a 1.8 per cent annualized rate in the first quarter, instead of the previous estimate of 2.4 per cent.

Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company, thinks markets will experience more of the volatility that has been a fixture since late May when traders started to worry that Fed stimulus may decrease. At the same time, he expects them to head higher.

“Either way, you are hedged, because there’s one side of it where you get good economic news – markets go up in the U.S.,” he said “If you get soft economic news, it suggests economic easing is going to continue. So you’re covered on both ends. And as long as confidence stays high, which it is, markets are going higher.”

On the corporate front, Aimia, the company that runs the Aeroplan customer loyalty program says it’s prepared to replace CIBC as its bank credit card partner at the end of this year unless it matches contractual terms offered by TD Bank. CIBC says it’s reviewing the proposed terms to see if it will exercise its right of first refusal and that it will continue the Aeroplan business as usual in the meantime. CIBC slipped 42 cents to $74.61 while Aimia gained $1.33 or 9.55 per cent to $15.25.

Gold stocks sustained sharp losses Wednesday as speculation about when the Federal Reserve may ease up on its monthly bond purchases 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. Goldcorp Inc. advanced 39 cents to $23.79.

The energy sector was ahead 0.55 per cent with the August crude contract on the New York Mercantile Exchange up 94 cents to $96.44 (U.S.) a barrel. Suncor Energy improved by 39 cents to $30.83.

The tech sector was also supportive with MacDonald Dettwiler & Associates rose $2.25 to $70.72. But BlackBerry shed three cents to $15.60, a day before the smartphone maker releases its quarterly earnings.

Bell will find out Thursday if its second attempt at buying Astral Media has the go-ahead from the federal broadcast regulator. The Canadian Radio-television and Telecommunications Commission says it will announce its decision at 4 p.m., after markets close. The CRTC shot down Bell’s initial, $3.4-billion bid for Astral last fall, saying it wasn’t in the best interests of Canadians. BCE gained 53 cents to $42.10.

The mood on markets was further improved as interbank lending rates in China continued to ease after a pledge earlier in the week by authorities to shore up banks facing cash shortfalls.

The central bank had allowed rates that banks pay to borrow from each other to soar last week, part of an attempt by Beijing to clamp down on massive credit in the informal lending industry.

Fears of a credit crisis in the world’s second-biggest economy had contributed to a selloff in global markets that ended when policymakers in China softened their stance with the promise to provide “liquidity support” if needed.

European bourses were positive as London’s FTSE 100 index gained 1.56 per cent, Frankfurt’s DAX was ahead 0.91 per cent and the Paris CAC 40 rose 1.21 per cent.

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