The Toronto stock market was higher Monday while stock in BlackBerry (TSX:BB) (Nasdaq:BBRY) plunged after the smartphone maker dropped a bombshell.
Fairfax Financial is no longer offering to buy BlackBerry outright. Instead, Fairfax (TSX:FFH) is leading a group that will provide the smartphone company with at least US$1-billion and up to US$1.25-billion of convertible debt.
Thorsten Heins will be replaced as BlackBerry CEO on an interim basis by John Chen, who will also be the chairman of the BlackBerry board of directors. BlackBerry shares tumbled 13.85 per cent to $6.97 on the TSX, its lowest level in a decade.
“The fact that the share price is so depressed is really again a reflection of the fact there is very little confidence at this point in the story from the market in terms of BlackBerry’s ability to really turn things around in short order,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“It’s going to be more of a show-me story. BlackBerry is going to have to prove that their new strategy is viable.”
The S&P/TSX composite index gained 16.91 points to 13,354.37, adding to last week’s solid advance ahead of a heavy week of economic news that could provide a hint as to whether the Federal Reserve could start winding up a key stimulus measure later this year.
Traders also looked ahead to another heavy week of earnings news from corporate Canada.
The Canadian dollar rose 0.15 of a cent to 96.05 cents US.
U.S. indexes were higher as the Dow Jones industrials climbed 33.78 points to 15,649.33, the Nasdaq was up 1.79 points to 3,923.83 and the S&P 500 index climbed 3.35 points to 1,764.99.
The most important data of the week comes out Friday – October employment data for Canada and the U.S.
Economists looked for Canadian job creation to come in at a modest 10,000 with an uptick in the jobless rate from 6.9 per cent to seven per cent.
In the U.S., job creation is expected to come in at only 125,000 for October while the unemployment rate is forecast to rise 0.1 of a point to 7.3 per cent. Analysts say that the numbers will be affected by the partial shutdown of the U.S. government shutdown last month since the data would include private sector workers who were laid off.
On Thursday, the U.S. government will release the first look at third quarter economic growth. Gross domestic product was expected to rise by an annualized rate of 1.9 per cent, down from 2.5 per cent in the second quarter, partly because of the uncertainty caused by brinkmanship in Washington over extending the government’s borrowing limit.
“Every major expenditure group is expected to slow in the third quarter, as the fiscal standoff undermines business investment and hiring,” observed BMO Capital Markets senior economist Sal Guatieri in a commentary.
On Tuesday, the Institute for Supply Management releases its latest snapshot of the American service sector, which is expected to show slightly slower expansion. The ISM index is expected to come in at 54, down from 54.4 in September.
The communique from last week’s meeting of the Federal Reserve left the impression that the central bank could decide to start winding up its $85-billion in monthly asset purchases as soon as December.
Those bond purchases have kept rate low and is one of the reasons why many stock indexes, including the main U.S. markets, have struck record highs this year.
Meanwhile, investors will take in plenty of earnings reports this week including WestJet (TSX:WJA) Tuesday, pipeline company Enbridge (TSX:ENB) and auto parts giant Magna International (TSX:MGA) on Wednesday. Thursday is the heaviest day for earnings as traders will hear from Tim Hortons (TSX:THI), BCE (TSX:BCE), Canadian Tire (TSX:CTC.A), Canadian Natural Resources (TSX:CNQ) and insurance giants Sun Life Financial (TSX:SLF), Manulife Financial (TSX:MFC) and Great West Lifeco (TSX:GWO).
Commodity prices were mixed with December bullion ahead $3.60 to US$1,316.80 an ounce, sending the gold index up 1.5 per cent. Goldcorp Inc. (TSX:G) moved up 49 cents to C$25.83.
The base metals sector was ahead 0.5 per cent while December copper lost four cents to US$3.26 a pound. Lundin Mining (TSX:LUN) rose 18 cents to C$4.79.
December crude on the New York Mercantile Exchange down six cents to US$94.55 a barrel and the energy sector edged up 0.1 per cent.
In other corporate news, Pacific Rubiales Energy Corp. (TSX:PRE) has received Colombian environmental licences for two exploration and development blocks that are strategically important to the Toronto-based company. One licence is for the CPE-6 heavy oil field, which is 50 per cent owned by Talisman Energy Inc. (TSX:TLM), and the other is for the Guama natural gas field, which is wholly owned by Pacifc Rubiales.
European bourses were positive with London’s FTSE 100 index up 0.6 per cent and Frankfurt’s DAX and Paris CAC 40 climbed 0.35 per cent.