Dundee Industrial prepares to make splash with big IPOFrank Gunn/The Canadian Press
The Toronto stock market was little changed Wednesday amid earnings misses from two of Canada's biggest grocers and fresh data that raised worries that the euro zone's economic growth may have stalled in the third quarter.
There was also lingering disappointment that a meeting of Chinese leaders failed to yield reforms to a growth model that is seen as running out of momentum.
The S&P/TSX composite index edged up 9.06 points to 13,335.1.
Loblaw Companies Ltd. (TSX:L) fell $2.85 or 5.96 per cent to $44.99 as the grocer lowered its 2013 forecast for profit growth due to thinner margins in the second half of the year. Loblaw also said its quarterly net income was $154-million or 55 cents per share, which was down 28.6 per cent a year earlier. Ex-items, earnings were $220-million or 78 cents per share, down 3.7 per cent a year ago. However, revenue was up 1.9 per cent to $10-billion.
Metro (TSX:MRU) shares lost $3.42 or 5.2 per cent to $62.29 after the company posted adjusted fully diluted net earnings per share from continuing operations of $1.19, up 4.4 per cent from a year ago. However, sales were down 1.1 per cent to $2.6-billion while same store sales fell 1.8 per cent.
"It's competitive, we're seeing square footage increase by some of the non-traditional players in that grocery space, whether it's Wal-Mart, Target, others," observed Garey Aitken, chief investment officer at Franklin Bissett Investment Management.
"And we know what demand is like. It's pretty mature. It doesn't go up much so it's just created a very challenging environment for them to contain costs to maintain margins."
The Canadian dollar was up 0.08 of a cent to 95.38 cents US, a day after Finance Minister Jim Flaherty said the Conservative government will end seven years of federal deficits in 2015 with a $3.7-billion surplus. The new projection is nearly $3-billion better than the March budget forecast.
U.S. indexes were mainly lower with the Dow Jones industrials down 56.8 points to 15,693.87, the Nasdaq climbed 1.86 points to 3,921.78 and the S&P 500 index lost 1.68 points to 1,766.01.
Eurostat, the EU's statistics office, reported that industrial output across the 17-country zone that uses the euro fell a monthly rate of 0.5 per cent in September.
The fall was slightly larger than expected and means the sector weighed on third-quarter growth.
The industrial figures come a day ahead of the first estimate for third-quarter growth. Until the release, most economists thought the eurozone would register a second straight quarter of growth following its longest-ever recession.
Traders also looked to confirmation hearings for Janet Yellen as the new Federal Reserve chief on Thursday could provide a fresh cue for financial markets. Investors will look to her testimony for indications about when the Fed will begin reducing its massive monetary stimulus that has supported a strong rally on many stock markets and kept the lid on long-term rates.
"The October jobs number combined with some other U.S. economic data as well as comments by members of the Fed has just heightened concern that maybe the tapering will commence sooner than originally thought and maybe as early as December of this year," Aitken said.
"We're starting to really split hairs and navel gaze when we get into that but . . .there's just a little more unease about that today than there was two weeks ago."
Meanwhile, Communist Party leaders in Beijing wrapped up a four-day meeting on the economy late Tuesday. Reform advocates had hoped for major changes such as curbing the dominance of state industry.
But they were disappointed as the ruling party said only that market forces will play a "decisive role" in China's economy, an upgrade from "core role" assigned to the market.
The metals and mining sector was a major drag, down 1.5 per cent as copper prices fell for a second day in the wake of the Chinese leadership meeting, down seven cents to US$3.16 a pound. First Quantum Minerals (TSX:FM) was down 71 cents or 3.66 per cent to C$18.68.
Energy companies led advancers, up 0.5 per cent while December crude on the New York Mercantile Exchange gained $1.14 to US$94.18 a barrel. Suncor Energy (TSX:SU) was up 57 cents to $37.07.
The gold sector also provided some lift, up 0.55 per cent as bullion prices advanced with the December contract up $3.40 to US$1,274.60 an ounce. Kinross Gold (TSX:K) lost five cents to $5.21.