The Toronto stock market was positive Monday as traders hoped a strong report from the American financial sector indicated another upbeat earnings season from North American corporations.
The S&P/TSX composite index rose 51.82 points to 15,177.32.
The Canadian dollar edged up 0.07 of a cent to 93.23 cents (U.S.) two days before the Bank of Canada makes its next interest rate announcement.
The Dow Jones industrials gained 134.52 points to 17,078.33 as Citigroup posted quarterly earnings per share of $1.24 (U.S.), beating forecasts of $1.06 a share and its stock ran ahead 3.7 per cent to $48.73. The bank also said Monday it will pay $7-billion to settle an investigation into risky subprime mortgages, the type that helped fuel the financial crisis.
The Nasdaq advanced 32.51 points to 4,448 while the S&P 500 index was ahead 11.85 points to 1,979.42.
Elsewhere in the financial group, Bank of America reports earnings on Wednesday.
On the tech front, chip giant Intel posts results Tuesday while Google reports on Thursday. The week is capped by earnings from General Electric on Friday.
The flood of Canadian corporate earnings reports generally lags the U.S. by a few weeks. The major domestic report of the week comes from Canadian Pacific Railway on Thursday. Walter Spracklin at RBC Capital Markets has reduced his earnings per share forecast for the second quarter to $2.13 (Canadian) from $2.16, reflecting higher costs and lower per-tonne grain revenue. However, he also raised his forecast for 2015 to $9.75 a share from $9.48 “on the expectation for grain volume strength to continue, which lifts our price target to $175 (from $171).” CP shares rose 80 cents to $197.18.
“Expectations still remain around the mid-single digits and five per cent (U.S. earnings growth) is really the expectation this quarter”, said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“All told, we will get another year of record profits for the S&P 500 and the TSX and that’s largely supportive of the markets at this point.”
Investors will also focus on monetary policy testimony from U.S. Federal Reserve chair Janet Yellen on Tuesday and Wednesday.
They’re hoping for some hint as to the timing of future rate increases by the Fed.
Also on Wednesday, the Fed’s latest regional economic survey will be released. Analysts say that, based on recent job figures, it should be a relatively upbeat report.
The energy sector was the leading TSX advancer, up 0.75 per cent even as the price of oil edged down toward $100 a barrel after its biggest one-day drop since April following growing expectations of more supplies from Libya. August crude declined 49 cents to $100.34 (U.S.) a barrel.
The industrials sector was also supportive as Bombardier Aerospace signed a number of agreements at the Farnborough International Airshow for its new C Series aircraft. Bombardier says Chinese company Zhejiang Loong Airlines Co. has signed a letter of intent for 20 CS100 airliners that would be worth $1.28-billion (U.S.) if all the orders were exercised. Before the show began, Bombardier had announced on Saturday that U.K-based Falko Regional Aircraft Ltd. signed letters of intent for up to 24 CS100 jets. Bombardier shares climbed nine cents to $3.86.
The gold sector was the biggest TSX drag, down 1.6 per cent as August bullion dropped $28 to $1,309.40 an ounce while investors took profits in the wake of recent gains. Gold prices had advanced for the past six weeks.
The base metals group lost 0.15 per cent while September copper was down one cent to $3.26 a pound.