The Toronto stock market was flat to slightly lower Tuesday amid data showing a stronger-than-expected read on Canadian economic growth and another report that raised concerns about the health of the American economy.
The S&P/TSX composite index declined 36.93 points to 12,275.74 following a string of gains, led by declines in mining stocks. But the TSX found support in strong earnings reports from oil producer Suncor Energy (TSX:SU) and business technology company CGI Group Inc. (TSX:GIB.A).
The loonie was up 0.54 of a cent to 99.39 cents US as Statistics Canada reported that gross domestic product grew by 0.3 per cent compared with January, topping expectations of 0.2 per cent.
GDP growth in January was also revised higher to 0.3 per cent from 0.2 per cent.
Shares of Suncor rose $1.25 to $30.89 after it posted operating earnings of $1.37-billion, or 90 cents per share Monday night, compared with $1.32-billion, or 84 cents per share, in the same period a year earlier. That handily beat the average analyst estimate of 75 cents per share, according to Thomson Reuters.
Canada’s largest energy company also increased its quarterly dividend to 20 cents per share from 13 cents and announced a $2-billion share buyback.
“You saw the dividend increase substantially, significant share buyback and a continuation of their drive on the part of new management to focus less on growth and more on return to shareholders,” said Robert Gorman, chief portfolio strategist at TD Waterhouse.
“And a precursor to this was cancellation of the (Voyageur oilsands) upgrader project which was going to be fairly high cost and questionable returns. To me, this is a positive story that will be unfolding over a protracted period.”
Shares of CGI Group Inc. (TSX:GIB.A) also pushed higher after the company reported better than expected results. The company earned $114.2-million or 36 cents per diluted share in its latest quarter, compared with $105.7-million or 40 cents per share a year ago when the company had fewer shares. Revenue soared to $2.53-billion from $1.065-billion, on the acquisition last year of Logica. CGI shares were up $3.81, or 14.1 per cent, to $30.84.
U.S. indexes declined as the Chicago Purchasing Managers Index, a key gauge of manufacturing in the U.S. Midwest, moved into contraction territory in April, coming in at 49, its lowest reading since September 2009, and down from 52.4 in March.
The Dow Jones industrials were down 33.54 points to 14,785.21.
The Nasdaq composite index climbed 5.02 points to 3,312.04 and the S&P 500 index declined 1.91 points at 1,591.7.
Traders also balanced positive consumer and housing data along with lower than expected earnings from drug company Pfizer.
Pfizer earned $2.75-billion (U.S.), or 38 cents per share, down from $1.79-billion, or 28 cents per share, a year earlier. Excluding one-time items, adjusted income was 54 cents per share, missing expectations by a penny and it shares fell 3.5 per cent.
The U.S. S&P Case-Shiller 20-city house price index rose by 0.3 per cent in February, which marked a 13th consecutive increase. The index was up 9.3 per cent year over year, the highest since the housing crash began in mid-2006.
Other data showed the Conference Board’s consumer confidence index rose to 68.1 in April from a reading of 61.9 in March.
Gorman added that the most important aspect of the consumer confidence data was the reading for expectations in the next six months: it jumped from 63.7 in March to 73.3 in April.
“They see three things,” he said. “A housing price recovery, which was reinforced by the Case-Shiller report. There’s a certain wealth effect there. Second, gasoline prices have eased. And the stock market is going up. Looking ahead they feel quite a bit better.”
On the TSX, the gold sector led decliners, down 3.44 per cent while June bullion on the New York Mercantile Exchange shed early gains and was down $2.90 to $1,464.50 (US) an ounce. Goldcorp Inc. (TSX:G) faded 84 cents to C$28.34.
The base metals sector was down 1.65 per cent as July copper on the Nymex slipped five cents to $3.18 (U.S.) a pound. First Quantum Minerals (TSX:FM) declined 49 cents to $16.80 (Canadian).
The industrials sector also weighed on the TSX as Canadian Pacific Railway (TSX:CP) stepped back $1.40 to $124.44.
June crude fell $1.08 to US$93.42 a barrel and the energy sector was up 0.45 per cent, thanks in large part to Suncor’s performance. Elsewhere, Imperial Oil (TSX:IMO) slipped 91 cents to C$39.15.
In other earnings news, Thomson Reuters (TSX:TRI) reported a seven per cent decline in operating profit in the first quarter, citing severance costs and an increase in depreciation and amortization expenses.
The global news and information company said underlying operating profit was $462-million, with adjusted earnings of 38 cents per share. Its shares were down $1.01 to $33.09.
European bourses were mixed as London’s FTSE 100 index moved down 0.62 per cent, Frankfurt’s DAX rose 0.5 per cent and the Paris CAC 40 declined 0.4 per cent.
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