Stocks traded around the flatline on Monday, as investors took profits after recent gains and markets failed to get traction from an upbeat figure on U.S. durable goods orders.
The TSX composite index fell less than 1 point to 12,816, with weakness in tech darling Research In Motion Ltd. ahead of a much-anticipated launch on Wednesday of its Blackberry 10 new phone model. Traders also digested the downgrade of many of the country’s major banks.
RIM shares fell about 7.6 per cent amid reports that China's Lenovo Group Ltd., which last week was quoted by Bloomberg News as saying it might want to buy RIM, is now downplaying those comments. Lenovo said the comments, from CFO Wong Wai Ming, was only meant to say that the company was open to all acquisition options, rather than specifically targeting the BlackBerry maker.
Equities in New York were mixed, with the Dow Jones industrial average down 14 points to 13,882 and the S&P-500 lower by 2.8 points to 1,500, while the technology heavy Nasdaq advanced 4.6 points to 3,154.
The news of better economic performance pushed the yield on 10-year U.S. Treasurys above 2 per cent for the first time since April 2012, although the bonds fell back below that psychologically important level in later trading. Rising bond yields suggest investors are growing more confident about the economic outlook and are shaking off some of the worries that fiscal wrangling in the U.S. over the country’s deficit has been damaging consumer and business confidence.
That view was bolstered by December U.S. orders for durable goods, or those designed to last more than three years, which soared 4.6 per cent, well above market expectations of a 2 per cent jump.
The figure “provides reason for optimism that recent improvements in business investment will be sustained despite some ongoing fiscal uncertainty surrounding current debt ceiling and budget negotiations,” Nathan Janzen, economist at the Royal Bank of Canada, wrote in a note to clients.
An index of pending U.S. home sales took a 4.3 per cent tumble in December, the first down month since August, but analysts said the decline probably reflected a reduction in inventories rather than a new downturn in the housing market.
Traders shrugged off a decision by Moody’s Investors Services to apply a one-notch downgrade on the long term credit rating of Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank and Toronto-Dominion Bank.
The firm says the banks are exposed to Canada’s high housing prices and indebted consumers, but also added that the institutions remain among the highest-rated banks in the world.
TransCanada Corp. advanced 1.1 per cent. The Globe and Mail reported that New Brunswick premier David Alward would welcome a proposed $5-billion pipeline to bring Alberta oil to Eastern Canada. TransCanada would be a major beneficiary of such a project.
Agrium CEO Mike Wilson told analysts that breaking up the company’s wholesale and retail fertilizer operations, as proposed by a major hedge fund shareholder, Jana Partners, would destroy shareholder value. Desjardins Securities said in a research note that it has a $125 target for the stock, which excludes “any theoretical value creation” through a break up. The shares fell 1 per cent
Rubicon Minerals Corp., off 1.2 per cent, said it is conducting optimization studies for the development of a gold deposit in northwestern Ontario. The measures will likely increase the initial capital cost of developing the project beyond the $214-million the company outlined in earlier plans.
The price for gold bullion edged lower, falling $3.30 U.S. to $1656 an ounce, its lowest level in two weeks, taking shares of most miners down a notch. Analysts say investors are selling the yellow metal, traditionally a safe harbour investment, because of reduced fears over the economic outlook.
In New York, Caterpillar Inc. issued a relatively upbeat outlook, sending shares of the construction equipment maker up 2 per cent.
Keryx Biopharmaceuticals Inc. posted one of the day’s largest percentage gains of more than 75 per cent, after releasing promising results from a drug it is developing to treat kidney disease