The Toronto stock market is little changed amid major acquisition activity and a revenue and profit warning from athletic wear retailer Lululemon Athletica.
The S&P/TSX composite index slipped 1.63 points to 13,733.89, with the market weighed down by gold and energy stocks.
The Canadian dollar was higher after five straight losing sessions, up 0.24 of a cent to 91.97 cents (U.S.) as the Bank of Canada said its winter business outlook survey shows some positive signs for exports and investment. However, the central bank says the business survey doesn’t appear to suggest a significant strengthening for the economy.
U.S. indexes were generally tepid as investors continued to digest Friday’s American government employment report, which showed that only 74,000 jobs were created during December. That missed estimates for at least 200,000 jobs and raised speculation about how quickly the Federal Reserve may move to end its key stimulus program, its massive monthly bond purchases.
The Dow Jones industrials declined 22.68 points to 16,414.37, the Nasdaq was up 2.74 points to 4,177.4 and the S&P 500 index drifted 1.67 points lower to 1,840.7.
Meanwhile, comments on the state of the U.S. markets from Goldman Sachs’ chief equity strategist gave traders pause for thought as the fourth quarter earnings reporting season starts to heat up this week.
This earnings season follows a strong 2013 where the S&P 500 rocketed about 30 per cent, helped in large measure by Fed stimulus. Investors want to see if strong earnings and revenue can justify that gain and push stock prices higher but David Kostin warns that the S&P 500 index’s valuation is “lofty by almost any measure.”
“The way to think about the market is the level of earnings and the multiple which should be applied to that earnings growth,” Kostin told Bloomberg Television.
“Those really are the fundamental drivers of the level of U.S. equity markets this year. Earnings growth is likely to be the principal source of return for U.S. investors because, historically speaking, the market is trading at a pretty elevated level.”
Traders will take in reports from major U.S. financial institutions including JPMorgan Chase, Wells Fargo and Bank of America along with market bellwethers including General Electric and chip giant Intel.
Shares of Lululemon Athletica plunged 16.7 per cent to $49.66 (U.S.) in New York after the Vancouver-based company said fourth-quarter revenue and profit will be significantly lower than its previous estimate. Lululemon’s new revenue range is between $513-million and $518-million (U.S.), about $22-million lower than the previous guidance, saying sales were on track through December but have been significantly below target this month.
The company’s new estimate for diluted earnings per share is between 71 and 73 cents per share, a reduction of seven cents.
There was also major acquisition activity in the mining sector.
Goldcorp Inc. is making a $2.6-billion cash and stock takeover play for Montreal-based Osisko Mining Corp. Goldcorp. is one of the Canada’s largest gold producers and says the acquisition of Osisko would provide it with a major mine in Quebec and other assets with growth potential. Goldcorp shares lost 63 cents to $24.66 (Canadian) while Osisko jumped 20 per cent to $6.20.
The energy sector led TSX decliners, down 0.55 per cent while February crude on the New York Mercantile Exchange was down 55 cents to $92.20 (U.S.) a barrel. Suncor Energy lost 40 cents to $37.56 (Canadian).
The tech sector fell 0.5 per cent. BlackBerry Ltd. has hired Eric Johnson, a senior executive from German global software giant SAP, as president of global sales for the smartphone company. He and BlackBerry chairman and CEO John Chen worked together previously at Sybase, which Chen turned around and grew before its sale to SAP for $5.8-billion (U.S.) in 2010. BlackBerry shares fell 47 cents to $9.09.
The gold sector was flat while February bullion edged $3.60 higher to $1,250.50 (U.S.) an ounce. Barrick Gold faded 39 cents to $19.43 (Canadian).
The base metals sector was ahead 0.35 per cent while March copper dipped one cent to $3.33 (U.S.) a pound. Capstone Mining gained 16 cents to $3.12 (Canadian) as the company released production results from its Pinto Valley, Cozamin and Minto mines. Capstone said it met overall 2013 copper production targets, “with outperformance at Pinto Valley and Cozamin comfortably offsetting lower production at Minto.”
Auto parts companies pushed the consumer discretion segment ahead as Magna International advanced $2.14 to $92.44.
Financials were also supportive as CIBC climbed 77 cents to $88.99.
European bourses were positive as London’s FTSE 100 index and Frankfurt’s DAX were ahead 0.3 per cent while the Paris CAC 40 added about 0.2 per cent.