The Toronto stock market was slightly higher Friday as investors took in encouraging data from China’s manufacturing sector while awaiting the latest reading on the health of the American manufacturing sector.
The S&P/TSX composite index was up 7.12 points to 13,368.38, pressured by continued weakness in the gold sector as prices hit a two-week low and Barrick Gold (TSX:ABX) announced a huge stock offering.
The Canadian dollar lost 0.07 of a cent to 95.83 cents US after running ahead more than half-a-cent Thursday in the wake of data showing higher than expected economic growth during August.
U.S. indexes were higher with the Dow Jones industrials up 61.84 points to 15,607.59, the Nasdaq rose 12.94 points to 3,932.64 and the S&P 500 index was up 5.59 points to 1,762.13.
HSBC Corp. said Friday its monthly purchasing managers’ index for China showed its best improvement in seven months, rising to 50.9 from September’s 50.2. Anything above 50 indicates expansion.
And an industry group, the China Federation of Logistics and Purchasing, said its index rose to 51.4 from the previous month’s 51.1.
China’s economic growth rebounded to 7.8 per cent in the three months ending in September, from the previous quarter’s two-decade low of 7.5 per cent.
Meanwhile, BMO Capital Markets looked for the October reading of the U.S. Institute for Supply Management’s manufacturing index to indicate slowing expansion, moving down to 55 from 56.2 in September.
The data will also be carefully weighed as to how it might affect the timing of the U.S. Federal Reserve in cutting back on a key stimulus program, its monthly purchases of US$85 billion of bonds.
The Fed announced earlier this week it could carry on with the program, which is credited with keeping long term interest rates low and therefore encouraging more people to buy equities. But there is much speculation about when the Fed might start to taper those asset purchases.
That speculation helped sent North American markets lower Thursday but ended up higher for the month.
The TSX rose 4.5 per cent during October, adding up to a 7.5 per cent gain year to date. The Dow is up about 20 per cent year to date.
The gold sector fell 2.3 per cent while December bullion moved $9.20 lower to US$1,314.50 an ounce. Goldcorp Inc. (TSX:G) fell 91 cents to C$25.65.
Barrick Gold (TSX:ABX) fell $1.22 or six per cent to $19.06 after it unveiled plans to raise roughly $3 billion to repay debt by issuing 163.5 million shares at $18.35 per share. Barrick also announced Thursday that it was suspending work on its troubled Pascua-Lama project as it moved to rein in costs in the face of lower gold prices and other problems at the mine under construction high in the Andes mountains.
Base metal stocks were also weak, down 0.75 per cent. December copper had received an earlier boost from the Chinese data but later was unchanged at US$3.30 a pound.
The sector was weighed down in particular by Taseko Mines (TSX:TKO). Its stock fell 28 cents or 11 per cent to $2.28 after a new environmental study into its billion-dollar New Prosperity mine proposal in British Columbia said it would pose “several significant adverse environmental effects.” Taseko’s (TSX:TKO) proposal received provincial approval in 2010 but the federal government rejected the original plan, which would have drained a lake of cultural significance to First Nations for use as a tailings pond.
The energy sector was 0.22 per cent lower as December crude on the New York Mercantile Exchange moved down 93 cents to US$95.88 a barrel. Crude has fallen 2.5 per cent this week following data out mid-week showing a sharp spike in U.S. supplies last week.
Industrial stocks were positive with Canadian National Railway (TSX:CNR) shares up $1.35 to $115.90 after it announced that it has reached tentative agreements with the Teamsters Canada Rail Conference. The union represents 3,000 conductors, trainpersons, yard workers and traffic co-ordinators.
Details of the agreements were withheld pending ratification by the union’s membership.
In other corporate developments, commercial real estate company Brookfield Property Partners LP is increasing its stake in General Growth Properties Inc. by paying $1.4 billion for some additional shares and warrants. The subsidiary of Brookfield Asset Management (TSX:BAM.A) will have a 32 per cent interest in General Growth if all the outstanding warrants are exercised. Brookfield Asset Management shares added four cents to $41.32.
U.S. hedge fund Silver Point Capital LP has acquired about 19 per cent of Postmedia Network Canada Corp.’s common shares. The stake makes it the second largest shareholder of the Toronto-based company which is Canada’s largest publisher of English-language daily newspapers, including the National Post. Postmedia (TSX:PNC.B) shares were unchanged from Thursday at $2.
European markets were lacklustre with London’s FTSE 100 index up 0.02 per cent, Frankfurt’s DAX declined 0.22 per cent and the Paris CAC 40 lost 0.34 per cent.