A man walks past the Nasdaq MarketSite in New York's Times Square, August 23, 2013.ANDREW KELLY/Reuters
The Toronto stock market was modestly higher Monday morning as the latest reading on U.S. manufacturing showed slowing expansion and the Chinese central bank moved to spark that country's slowing economy through a rate cut.
The S&P/TSX composite index gained 28.59 points to 15,262.93, held back by further losses in the energy and gold sectors. The Canadian dollar declined 0.13 of a U.S. cent to 79.85 cents.
U.S. indexes were higher as the Institute for Supply Management's manufacturing index dropped to 52.9 from 53.5, roughly in line with expectations. Among other things, the reading reflected a stronger American currency and lower oil prices, which have cut capital spending plans by energy companies, as well as the recently ended labour disruptions at West Coast ports that impeded supply chains.
"The U.S. economy is showing the most amount of momentum," said Craig Fehr, Canadian Markets Specialist at Edward Jones in St. Louis.
"But even the data there is going to continue to be mixed. It's indicative of the fact that some of the challenges that exist in economies around the world are going to continue to weigh on some of the important trends. Things like (purchasing managers) indicators are all going to continue to reflect these global balances."
The Dow Jones industrials jumped 112.38 points to 18,245.08, the S&P 500 index climbed 7.67 points to 2,112.17 and the Nasdaq was up 30.1 points to 4,993.63 after briefly topping 5,000 earlier in the day.
There was relief on markets after the People's Bank of China on Saturday cut its key rate a quarter point to 5.35 per cent, the lowest in over five years, as the government aims to keep to its growth target of around seven per cent.
The rate cut came as official surveys of purchasing managers showed a contraction in the manufacturing sector for a second month in a row. The official manufacturing PMI came in at 49.9 in February, up slightly from 49.8 in January.
However, the relief didn't translate into gains as the rate cut was likely already priced in, as witnessed by last week's four per cent jump in copper prices.
"We started to get that sniffed out last week in terms of the move in some commodities," Fehr said. "Copper obviously has, for a very long time, been a key proxy for measuring enthusiasm if not growth in the Chinese economy."
"I think at this point, more aggressive policy action, not only by (the Chinese central bank) but the major central banks around the world, is really fully baked in by the market at this point."
On Monday, May copper edged a penny higher to $2.70 (U.S.) a pound and the base metals group gained one per cent.
Tech stocks and industrials also provided lift for the TSX.
The energy sector was down 0.6 per cent even as the April crude contract erased early losses to move up 83 cents to $50.59 a barrel.
Falling prices pushed the gold sector down one per cent with April bullion down $5.20 at $1,207.90 an ounce.
It's a heavy week for key U.S. data with investors also taking in vehicle sales, the ISM's non-manufacturing index, factory orders and the government's employment report at the end of the week.