The Toronto stock market registered a solid advance Monday amid strong manufacturing data from the U.S. and Europe.
Traders also looked ahead to the major economic event of the week – the U.S. Federal Reserve’s meeting Wednesday when markets may find out what the central bank intends to do about cutting back on a key area of stimulus.
The S&P/TSX composite index gained 74.71 points to 13,200.41 while the Canadian dollar was ahead 0.07 of a cent to 94.45 cents (U.S.).
U.S. indexes were up sharply as investors wait to see if the Fed will start to taper its monthly $85-billion of bond purchases.
The Dow Jones industrials ran ahead 165.85 points to 15,921.21, the Nasdaq rose 34.65 points to 4,035.62 and the S&P 500 index climbed 15.29 points to 1,790.61.
“We reckon it’s a coin flip whether the Fed announces reduced asset purchases on Wednesday,” said BMO Capital Markets senior economist Michael Gregory. He said if the Fed did start to taper, it would start next month “to the tune of $5-to-$10-billion.”
Speculation about Fed intentions has grown considerably over the past couple of weeks in the wake of a series of strong economic data, particularly a solid employment report for last month. Also, a bipartisan committee struck a U.S. congressional budget bill, which would remove the threat of another government shutdown.
Many traders aren’t happy to see an end to the asset purchases as they have kept long-term rates low and supported a strong advance on many markets this year, including the Dow industrials which has surged a good 20 per cent.
That hasn’t been the case in Toronto where the TSX is heavily weighted in favour of the resource sector. The Toronto market ended last week up about 5.6 per cent higher year to date.
The TSX tech sector was the biggest percentage advancer, ahead 0.85 per cent. BlackBerry shares rose 14 cents to $6.56 as the Wall Street Journal reported two high level departures at smartphone maker BlackBerry. It cites sources as saying BlackBerry’s executive vice president in charge of global sales, Rick Costanzo, will be leaving the company by early next year. And Chris Wormald, who was in charge of BlackBerry’s mergers and acquisitions strategy, will reportedly be gone by the end of this month. BlackBerry posts earnings on Friday.
Elsewhere, Celestica gained 14 cents to $10.67.
The financials sector rose 0.7 per cent as Royal Bank climbed 76 cents to $68.99.
Industrials also lifted the TSX as Bombardier improved by four cents to $4.53.
Commodity prices advanced as U.S. factory production rose a solid 0.6 per cent November, led by a surge in auto output.
Financial information company Markit says its purchasing managers index for the euro zone beat expectations, rising to a 31-month high of 52.7 from 51.6 in November. At the same time, the services PMI slipped to a four-month low of 51 from 51.2.
Other data showed that China’s manufacturing sector grew at a slightly slower pace in December, according to a preliminary survey by HSBC. Its flash purchasing managers’ index slowed to a three-month low of 50.5.
However, the reading was still high enough to indicate that China’s economy is continuing to recover since slowing to 7.5 per cent growth in the second quarter.
The energy sector was ahead 0.4 per cent while the January crude contract on the New York Mercantile Exchange gained 39 cents to $96.99 (U.S.) a barrel. Imperial Oil rose 46 cents to $45.75 (Canadian).
The base metals sector edged up 0.15 per cent as March copper added one cent to $3.33 (U.S.) a pound. Teck Resources was up 25 cents to $24.66.
The gold sector was also ahead about 0.15 per cent while February gold added 70 cents to $1,235.30 (U.S.) an ounce.
Elsewhere on the corporate front, American insurer AIG is selling its aircraft leasing business International Lease Finance Corp. to AerCap in a cash-and-stock deal valued at approximately $5.4-billion. American International Group Inc. said that this is the last major sale of one of its non-core assets. AIG received the biggest bailout of the financial crisis five years ago. The insurer has undergone a massive restructuring that cut its size in half as it focused on its core insurance business.
Primero Mining Corp. (TSX:P) has a friendly deal to acquire Brigus Gold Corp. in an all-stock transaction valued at about $220-million. The deal values Brigus shares at 91 cents each – a 45 per cent premium to the market price – based on the Primero’s closing price of $5.22 on the Toronto Stock Exchange on Friday. Brugus shares surged 31.75 per cent to 83 cents and Primero shares fell 43 cents to $4.79.
Panasonic Corp. will assign about 900 patents and patent applications to a new subsidiary of Ottawa-based patent licensing firm Wi-LAN Inc. It didn’t provide an estimate on what the portfolio is worth or financial terms of its arrangement with Panasonic. Wi-LAN shares inched up two cents to $3.35.
European bourses were higher with London’s FTSE 100 index ahead 0.88 per cent, Frankfurt’s DAX rose 1.49 per cent while the Paris CAC 40 was up 1.04 per cent.
Earlier in Asia, most markets fell as traders sought direction ahead of the Fed meeting.
Tokyo’s Nikkei 225 index slipped 1.6 per cent despite a positive report from Japan’s central bank showing improved business sentiment, the best in six years for large manufacturers.
Seoul’s Kospi inched down 0.09 per cent, Hang Seng dipped 0.56 per cent, Stocks were down almost across the region, including Indonesia, Hong Kong, Taiwan and Singapore.