The Toronto stock market was modestly higher Tuesday as traders balanced a better than expected earnings report from U.S. aluminum giant Alcoa Inc. with further indications of a slowing Chinese economy.
The S&P/TSX composite index was up 29.56 points to 11,664.24 and the TSX Venture Exchange gained 6.25 points to 1,218.22.
The Canadian dollar advanced 0.1 of a cent to 98.21 cents U.S. following the release of bullish housing data.
Canada Mortgage and Housing Corp. said housing starts rose to a seasonally adjusted rate of 222,700, up sharply from 217,400 in May. CMHC said the rise was mainly attributable to multiple urban starts in Quebec and British Columbia.
Research in Motion shares were ahead 15 cents to $7.95. The company is expected to tell shareholders at their annual meeting Tuesday that the launch of BlackBerry 10 will be worth the wait even though it’s behind schedule. RIM surprised the market two weeks ago when it announced that the BB10 launch would be delayed into 2013, sparking another sharp decline in its already depressed stock price.
U.S. markets also higher at the open, after Alcoa reported adjusted earnings of six cents per share, which beat the consensus estimate by a penny. Revenue dropped nine per cent to $5.96-billion (U.S.) mainly because of weak prices for aluminum in the slowing global economy. But the showing still topped expectations.
The company stuck with its forecast for a seven per cent increase in global demand this year and predicted that there would be a global aluminum supply deficit this year. Alcoa’s performance reflects broader economic trends because aluminum is used in a wide range of products from automobiles to beverage cans. Its shares lost early momentum and slipped seven cents to $8.69 (U.S.) in New York.
In Canadian earnings news, drug store chain Jean Coutu Group says unusual gains on its U.S. Rite Aid holdings as well as improved revenue helped quarterly earnings soar eightfold to $397.4-million and its shares rose a penny to $14.76.
The Dow Jones industrials gained 67.7 points to 12,803.99.
The Nasdaq composite index was up 15.84 points to 2,947.61 and the S&P 500 index advanced 6.91 points to 1,359.37.
Traders got another reminder of the fragility of the economic recovery after China’s trade growth plunged in June, hurt by weak U.S. and European demand.
Import growth fell by half from May’s level to 6.3 per cent while export growth declined to 11.3 per cent from May’s 15.3 per cent.
Growth in the world’s second-largest economy has tumbled to its lowest level since the 2008. That is bad news for companies and investors looking to relatively strong Chinese growth to shore up global demand as the United States and Europe struggle.
In particular, it’s also a negative for the resource-heavy Toronto stock market and the price of oil and metals.
Strong Chinese demand for commodities boosted prices for crude and copper and supported resource stocks on the TSX earlier in the year. But crude has fallen from $106 (U.S.) in May, copper has tumbled 10.7 per cent and the TSX has fallen almost six per cent in under three months. The Toronto market is down about 2.7 per cent year to date.
Commodity prices were mainly lower following the release of the Chinese data with the August crude contract on the New York Mercantile Exchange down 60 cents to $85.39 (U.S.) as barrel. However, the energy sector rose 0.45 per cent as Canadian Natural Resources gained 26 cents to $26.58.
The base metals sector climbed 0.8 per cent with August copper off a penny at $3.41 (U.S.) a pound. Teck Resources ran up 50 cents to C$31.58.
The gold sector was little changed as bullion gained $9.40 to $1,598.50 (U.S.) an ounce.
The financial group was ahead 0.45 per cent. Royal Bank rose 29 cents to $52.87.
The industrials group was ahead 0.5 per cent with Canadian National Railways up 39 cents to $86.25.