The Toronto stock market closed higher Monday, building on last week’s strong gains amid a major corporate development in the consumer sector and growing confidence that the TSX has turned a corner and is on the way to a positive year.
The S&P/TSX composite index rose 50.44 points to 13,186.53.
The rise followed a jump of almost two per cent last week, and leaves the TSX up about six per cent year to date.
“We seem to have broken a little bit of this underperformance trend that has been existing for the majority of the year,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“We are seeing a landscape where investors are becoming more confident . . . that growth is going to improve a bit across the board and when that happens, Canada’s market is squarely in the crosshairs of an improving profile because export demand will have a huge impact on what we see from the TSX.”
Maple Leaf Foods (TSX:MFI) is looking at the possibility of selling its bakery business, which includes a 90 per cent interest in Canada Bread (TSX:CBY), maker of Dempster’s and other brands.
Based on recent stock market values, Canada Bread had a value of about $1.6-billion prior to the announcement Monday. Maple Leaf shares jumped $1.33, or 10.45 per cent, to $14.63, while Canada Bread shares surged $4.92, or 8.03 per cent, to $66.17.
The Canadian dollar was down 0.06 of a cent to 97.08 cents US two days before the Bank of Canada’s next interest rate announcement.
U.S. indexes were mixed as investors looked to a heavy week of earnings data and economic reports that were held up because of the partial U.S. government shutdown that dragged on until late last week.
The Dow Jones industrials declined 7.45 points to 15,392.2, the Nasdaq gained 5.77 points to 3,920.05 and the S&P 500 index added 0.16 of a point to 1,744.66.
The major economic report of the week is the U.S. government’s employment report for September. That’s due on Tuesday and could provide investors with an indication as to when the Fed will start reducing its US$85-billion worth of monthly asset purchases.
On the earnings front, McDonald’s earned $1.52-billion, or $1.52 per share, in the latest quarter, which was a cent better than forecast. But its revenue increase of two per cent to $7.32-billion missed expectations of $7.33-billion and its shares were down 61 cents to US$94.59.
Toymaker Hasbro Inc. said third-quarter net income rose 17 per cent from a year ago to $193-million, or $1.46 per share. Ex-items, Hasbro’s earnings were $1.31 per share, a penny above estimates and its shares jumped $2.48, or 5.25 per cent, to $49.72.
After the close, Netflix reported third-quarter earnings per share of 52 cents, three cents better than estimates. It also beat on revenue and its shares jumped seven per cent in after hours trading in New York.
The gold sector led TSX advancers, up about 2.5 per cent while December bullion rose $1.20 to US$1,315.80 an ounce. Barrick Gold Corp. (TSX:ABX) rose 46 cents to C$19.53.
The base metals sector rose 1.36 per cent as December copper lost early momentum and was unchanged at US$3.30 a pound. HudBay Minerals (TSX:HBM) was ahead 24 cents at C$8.52.
Financials also provided lift with CIBC (TSX:CM) ahead $1.37 to $85.35.
The industrials sector gained 0.46 per cent and Bombardier (TSX:BBD.B) shares closed at a 52-week high after it said Flexjet has placed firm orders for 30 more of it Learjet 85 aircraft. Bombardier shares rose 22 cents, or 4.33 per cent, to $5.30.
Techs led decliners as BlackBerry (TSX:BB) shed 12 cents to $8.52.
The November crude contract on the New York Mercantile Exchange fell $1.59 to US$99.22 a barrel – its lowest level since July 1 – amid rising supplies of crude and lower demand. The energy sector declined 0.28 per cent and Canadian Natural Resources (TSX:CNQ) gave back 39 cents to $33.39.
It is also a heavy earnings week for Canadian companies, particularly those in the resource sector and with companies related to that group, including the country’s two big railways.
Canadian National Railways (TSX:CNR) posts earnings Tuesday and Canadian Pacific Railway (TSX:CP) reports on Wednesday and both are expected to show rising revenues from greater shipments of crude oil.
“If it’s not going to move by pipeline – and it’s still going to move – then rail becomes the default,” observed Fehr.
“Ultimately, we are going to get more pipeline capacity but I think ultimately we are going to see more oil flow from Canada and if that happens, it’s going to be split to varying degrees between the rails and pipelines.”