The Toronto stock market was higher on Monday, rebounding from stocks’ worst week in 2013, though mixed earnings results from U.S. firms pointed to choppy trading ahead.
The S&P/TSX composite index gained 34.95 points to 12,100.5 while the Canadian dollar fell 0.05 of a cent to 97.39 cents U.S. after a weekend meeting of the G20 countries endorsed Japan’s efforts to end a 15-year battle against deflation through an aggressive monetary policy.
U.S. indexes were also higher amid an earnings miss from heavy equipment Caterpillar as the Dow Jones industrial average gained 28.42 points to 14,575.93. The Nasdaq composite index was ahead 16.32 points to 3,222.38 while the S&P 500 index was ahead 4.57 points to 1,559.82.
Commodity prices were mixed after severe downturns last week. The May crude contract on the New York Mercantile Exchange gained 51 cents to $88.52 (U.S.) a barrel .
Air Canada’s earnings report estimates it had a $260-million net loss in the first three months of this year, down from $274-million in the first quarter of 2012. The company said it issued the preliminary report ahead of the full results and analysis on May 3 to comply with disclosure rules as it explores a range of debt financing options. It didn’t disclose what financing options are being considered.
Markets are coming off a week of extreme volatility, with the CBOE Volatility index jumping 24 percent, the biggest weekly gain for the so-called fear index this year.
The swings were largely driven by weak corporate earnings and signs of slowing growth from China, which contributed to a precipitous drop in commodity prices. The week’s decline fueled talk that the market’s long-awaited pullback had arrived, though the S&P remains up 9 percent on the year.
Caterpillar reported results early Monday, and shares advanced 0.6 percent to $80.88 in premarket trading. Halliburton rose 3.9 percent to $38.66 before the opening bell after posting its results.
Earnings also due on Monday included Texas Instruments and Netflix Inc. after the market’s close. For the week, 168 companies in the S&P 500 are scheduled to report earnings.
With 104 S&P 500 components having reported through Friday, 67.3 percent of companies have topped profit expectations, according to Thomson Reuters data. Analysts expect earnings growth of 2.1 percent this quarter, up from expectations of 1.5 percent at the start of the month.
Commodity prices were mixed after severe downturns last week.
The June crude contract on the New York Mercantile Exchange gained 48 cents to US$88.75 a barrel after data showing a weakening Chinese economy and a downgrade of global economic growth by the International Monetary Fund raised demand concerns and pushed crude down three per cent last week.
“Are we in the midst of a fundamental reappraisal of oil’s price potential or merely witnessing a temporary loss of confidence? There is a real chance on this occasion that it is the former,” David Hufton of PVM oil brokerage said, citing a tepid global growth forecast, reduced political concerns and high stocks.
Gold prices were higher with the June contract in New York ahead $39.50 to $1,435.10 (U.S.) an ounce. Bullion plunged to its lowest level in more than two years last week, falling seven per cent amid a growing conviction that inflation is firmly under control. Buying gold as a hedge against inflation has supported gold prices to record highs of almost $2,000 back in 2011.
However, copper prices continued to hover at 18-month lows. The metal, widely viewed as an economic barometer because of its use in so many applications, fell two cents to US$3.12 a pound on top of a six per cent slide last week.
The euro fell against the dollar, dropping 0.1 percent to $1.3040, edging towards the bottom of the $1.30 to $1.32 range held for nearly two weeks.
From a fundamental point of view, the euro has been hamstrung by persistent talk of an interest rate cut by the European Central Bank. Such bets could intensify if this week’s data releases, including Tuesday’s flash Purchasing Manager’s Index for April, come in weak.
“If we don’t see an element of stabilization, let alone improvement (in the flash PMIs) then the euro could come under pressure,” said Jeremy Stretch, head of currency strategy at CIBC World Markets.
With files from AP and Reuters