The Toronto stock market was higher Monday amid rising commodity prices and ahead of a busy earnings week for Canadian corporations.
The S&P/TSX composite index gained 53.15 points to 12,738.28 on top of four, straight weeks of gains.
The Canadian dollar was ahead 0.11 of a cent to 96.57 cents US.
U.S. indexes were weak amid an earnings disappointment from McDonald’s as the Dow Jones industrials gave back 19.31 points to 15,524.43, the Nasdaq was 1.69 points higher to 3,589.3, while the S&P 500 index dipped 0.31 of a point to 1,691.78.
Earnings at U.S. companies have for the most part shown more positive surprises than disappointments.
But McDonald’s fell short of expectations as the world’s biggest fast food purveyor said second-quarter profit rose to US$1.4-billion, or $1.38 a share, from $1.35-billion, or $1.32 a share, a year earlier. Sales rose two per cent to $7.08-billion. Analysts had expected earnings of $1.40 a share on sales of $7.08-billion. Don Thompson, president and chief executive officer, said he expects the results for the rest of 2013 “to remain challenged” and shares of McDonald’s fell about three per cent.
In Canada, traders will take in earnings from Canadian National Railway after the close while Canadian Pacific reports Wednesday. Traders expect both railways are expected to post strong results despite a slowdown in June volume for grain and coal carloads in Canada. At the same time, both railways have benefitted from higher shipments of crude oil. But they could be faced with more stringent regulations about moving crude following the rail disaster at Lac Megantic, Que., that claimed almost 50 lives.
Analysts expect CN to post earnings per share of $1.63, up from $1.44 a year earlier. CN is expected to report that earnings ex-items came in at $1.62, up from $1.50 a year ago. Revenue is expected to come in at $2.7-billion, rising from $2.54-billion a year ago. In early trading, CN shares added a nickel to $105.60.
A lower dollar helped support commodity prices because a weaker greenback makes it less expensive for holders of other currencies to buy oil and metals which are dollar-denominated.
The gold sector led advancers, up almost four per cent while August bullion ran up $28.60 to $1,321.50 an ounce. Barrick Gold Corp.ran up 90 cents to $18.06.
The base metals sector was ahead one per cent while September copper was up five cents to US$3.19 a pound. Teck Resources gained 34 cents to $23.82.
The energy sector was 0.25 per cent higher while the September crude contract on the New York Mercantile Exchange shed early gains and was down 15 cents to US$107.90 a barrel.
But prices have jumped about 12 per cent this month, underpinned by three weeks of declining U.S. stockpiles. Rising prices have lifted TSX energy stocks and the sector has gained more than five per cent this month.
Tech stocks led decliners with CGI Group up 57 cents to $30.15.
The TSX and other markets have found lift from a steadily improving U.S. economic climate, seen most recently in data that job creation has done better than expected and a strong U.S. manufacturing report. Traders have also been reassured that the U.S. Federal Reserve is in no hurry to remove economic stimulus.
The TSX ran up 223 points or 1.8 per cent last week, leaving the main index up two per cent for the year to date. U.S. markets also gained ground for a fourth week, leaving the Dow industrials up about 19 per cent year to date.
Investors will also take in a heavy slate of earnings from the resource sector. Teck Resources is the biggest Canadian mining company to report this week and analysts forecast the Vancouver-based company will post adjusted earnings of 33 cents a share on Thursday, down from 53 cents a year ago.
Its stock has been badly battered, falling to about $24 from the 52-week high of $38.13 that was established about a year ago.
Elsewhere, gold miner Agnico-Eagle Mines reports Wednesday with Cenovus Energy and Encana on Wednesday and Husky Energy on Thursday.
Outside of the resource sectors, grocer Loblaw Cos. Ltd. reports results Wednesday.
In other corporate news, Intact Financial Corp. says several recent Canadian disasters, including flooding in Alberta, the Lac-Megantic train derailment and a heavy rain storm in the Toronto area, will result in more than $270-million of losses in its second and third quarter. The Toronto-based company is one of Canada’s largest property insurers. Its shares declined 56 cents to $56.97.
Earlier in Asia, Tokyo’s Nikkei 225 gained 0.5 per cent after Japanese election results gave the country’s ruling coalition a majority in parliament’s upper house and a mandate to push ahead economic reforms.
Preliminary results from Sunday’s election show the coalition led by Shinzo Abe won a majority in the upper house. Analysts said the victory removes a roadblock to implementing its economic reform agenda.
China’s benchmark Shanghai Composite Index added 0.6 per cent despite concerns over the scale of the country’s economic slowdown. Hong Kong’s Hang Seng rose 0.2 per cent.
European bourses were mixed with London’s FTSE 100 index off 0.29 per cent, Frankfurt’s DAX slipped 0.02 per cent while the Paris CAC 40 added 0.28 per cent.