The Toronto stock market was modestly higher Wednesday amid strong earnings reports from the two big railways and glum news from China’s financial sector.
The S&P/TSX composite index rose 34.23 points to 13,282.29, following six straight advances for the Toronto market.
The Canadian dollar, already down early in the session, dropped further after the Bank of Canada announced economic growth will be lower than expected through 2015.
By late morning, the loonie was down 0.83 of a cent at 96.36 cents US from Tuesday’s close. It had been down just 0.36 of a cent US shortly before the central bank’s announcement.
U.S. indexes were also lower after a string of gains, as traders took in positive earnings from Boeing and a disappointment from Caterpillar.
The Dow Jones industrials lost 85.22 points to 15,382.44, the Nasdaq declined 38.04 points to 3,891.53 and the S&P 500 index was down 11.8 points to 1,742.87.
Canada’s two largest railroads both reported strong earnings results that beat analyst estimates on several key measures.
Canadian National Railway (TSX:CNR) said after the close Tuesday that quarterly profits climbed 6.1 per cent to $705-million. CN also posted adjusted earnings of $1.72 a share, a dime better than estimates. Revenue came in at $2.7-billion, against estimates of $2.64-billion and its shares ran up $3.96 to $113.71 after hitting a new 52-week high of $113.79.
On Wednesday, Canadian Pacific Railway (TSX:CP) posted record earnings and the lowest operating ratio in its history in the third quarter as revenue rose by six per cent from last year to $1.5-billion. CP’s net income was $324-million or $1.84 per diluted share, up from $224-million or $1.30 per share in the third quarter of 2012. CP’s operating ratio improved to 65.9 per cent, down from 74.1 per cent. Its shares jumped $8.05 to $142.79, getting close to its 52-week high of $144.43.
Electronics manufacturer Celestica Inc. (TSX:CLS) reported an increase in third-quarter net earnings despite a decline in revenue as a result of last year’s loss of its manufacturing contract with BlackBerry (TSX:BB). Celestica says net earnings improved to US$57.4-million or 31 cents per share from $43.7-million or 21 cents a year ago. Revenue slumped to US$1.49-billion from more than US$1.57-billion in the 2012 quarter and its shares gained 76 cents to $11.54.
It was a mixed bag in the U.S. where Caterpillar shares were down $5.29 or 5.93 per cent to US$83.88 after the maker of heavy equipment cut its 2013 revenue forecast to US$55-billion from earlier estimates of $56-billion to $58-billion.
Caterpillar earned $946-million, or $1.45 a share, in the third quarter, down from $1.7-billion, or $2.54 a share, a year ago. Total sales and revenue fell to $13.42-billion from $16.45-billion. Analysts expected earnings of $1.68 a share on revenue of $14.29-billion.
Aircraft maker Boeing reported third-quarter profit rose 12 per cent to $1.2-billion, or $1.51 a share. Ex-items, earnings per shares came in at $1.80 per share, up from $1.55 a year earlier. Revenue rose to $22.1-billion, from $20-billion a year earlier. Analysts had expected earnings of $1.55 a share on revenue of $21.7-billion. Boeing also raised its full-year 2013 earnings expectations and its shares rose $6.70 or 5.47 per cent to $129.18.
Commodity prices were sharply lower amid speculation that the People’s Bank of China may tighten monetary policy to cool a hot property market. China reported Tuesday that house prices surged in some cities including Guangzhou/Shenzhen where prices jumped 20 per cent year-over-year, Shanghai jumped 17 per cent while Beijing was up 16 per cent.
The bank reported Wednesday that outstanding real estate loans are up 19 per cent from a year ago.
The gold sector was ahead 0.7 per cent as bullion fell $9 to US$1,333.60 an ounce. Iamgold (TSX:IMG) gained 10 cents to C$5.46.
Telecom stocks were also supportive, up one per cent as Telus (TSX:T) climbed 89 cents to C$36.64.
The market was dragged down by a 1.65 per cent drop in the base metals sector as December copper lost six cents to US$3.28 a pound. Teck Resources (TSX:TCK.B) fell 84 cents to C$28.88.
The energy sector was down 0.7 per cent as the December crude contract on the New York Mercantile Exchange dropped $1.78 to US$96.52 a barrel, its lowest level since late June. Suncor Energy (TSX:SU) fell 60 cents to C$36.91.
Losses piled up after data from the U.S. Energy Information Administration showed that U.S. crude inventories rose more than expected last week. Supplies rose 5.2 million barrels, much higher than the three million barrel climb that analysts had expected.
European bourses were negative with London’s FTSE 100 index down 0.53 per cent, Frankfurt’s DAX declined 0.43 per cent while the Paris CAC 40 fell 0.95 per cent.
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