The Toronto stock market was slightly higher Tuesday amid plans by Canadian Pacific’s biggest shareholder to lighten its position in the railway and a setback for Telus Corp. and the telecom sector.
The S&P/TSX composite index gained 11.4 points to 12,621.2, led by gains in energy stocks.
The Canadian dollar was down 0.32 of a cent to 96.98 cents (U.S.) as Canada’s merchandise trade deficit with the world rose sharply during April. Statistics Canada said the deficit went from $3-million in March to $567-million the following month.
U.S. indexes were generally lacklustre amid strong data from the housing sector with the Dow Jones industrials down 1.46 points to 15,252.57, the Nasdaq climbed 5.07 points to 3,470.44 and the S&P 500 index slipped 0.01 of a point to 1,640.41.
Canadian Pacific Railway weighed on the TSX, down $2.21 to $133.29 after Bill Ackman’s Pershing Square Capital Management, CP’s biggest shareholder, said Monday that it plans to sell up to seven million of the railway’s shares over the next six to 12 months. The stock has soared since Ackman won the battle to install new board members and a new chief executive, Hunter Harrison, who formerly held the top executive job at Canadian National.
Meantime, the railway has been cut to underperform from sector perform by RBC Capital Markets following Pershing Square’s announcement Monday after the market closed. RBC also set a price target of $104 per share. RBC said Pershing’s move will result in limited upside for the stock and put investor focus back on the fundamentals.
The telecom sector was also in focus after federal Industry Minister Christian Paradis said Mobilicity and other new wireless carriers won’t be allowed to transfer spectrum to big carriers. The minister’s announcement is a setback for Telus which had asked permission to acquire Mobilicity and its spectrum. The wireless industry has been calling on Ottawa to clarify the rules ahead of the next spectrum auction, which Paradis has postponed to Jan. 14 to allow more time for new entrants to prepare. Telus shares slipped five cents to $35.78.
The gold sector was the biggest decliner, down 2.1 per cent while August gold on the New York Mercantile Exchange fell $17.20 to $1,394.70 (U.S.) an ounce. Barrick Gold faded 69 cents to $21.27 (Cdn).
Consumer staples were also weak, down 0.8 per cent with grocer Loblaw Cos. down $1.02 to $49.62.
The energy sector gained 0.4 per cent as July crude on the Nymex lost 64 cents to $92.81 (U.S.) a barrel. Cenovus Energy gained 43 cents to $31.43.
July copper edged up three cents to $3.36 (U.S.) a pound, taking the base metals sector ahead 0.25 per cent. Teck Resources climbed 20 cents to $27.82.
Techs were also supportive with BlackBerry ahead 30 cents to $14.29.
On the economic front, U.S. home prices soared 12.1 per cent in April from a year earlier, the biggest gain since February 2006. Real estate data provider CoreLogic also says prices also rose 3.2 per cent in April from March, much better than the previous month-to-month gain of 1.9 per cent.
Also on Tuesday, the Commerce Department reported that the U.S. trade deficit widened 8.5 per cent to $40.3-billion (U.S.) in April, with a broad European recession and slowing economies in Asia hurting exporters.
Tuesday is probably the lightest economic data day of the week, but the pace picks up on Wednesday with the ADP private payrolls report for May and the ISM’s survey of activity in the services sector. Most important will be Friday’s nonfarm payrolls report for May. The payrolls figures are usually the U.S. economic release with the greatest market impact.
Canadian employment data also comes out on Friday.
It’s also a big week in Europe, with the European Central Bank meeting to discuss the ailing euro zone economy and whether anything more needs to be done to get it growing again. The latest speculation in the markets is that the ECB will refrain from announcing any big new measures Thursday.
European bourses were positive as London’s FTSE 100 index climbed 0.31 per cent, Frankfurt’s DAX dipped 0.06 per cent while the Paris CAC 40 index was up 0.1 per cent.
Earlier in Asia, Japan’s Nikkei 225 index clawed back some of its prior session losses with a 2.1 per cent gain. Mainland Chinese shares fell for a fourth straight day, with the Shanghai Composite Index falling 1.2 per cent, its biggest loss in more than a month. Hong Kong’s Hang Seng was nearly unchanged.