The Toronto stock market closed higher Thursday to crack the 13,000 level for the first time since late July 2011.
The S&P/TSX composite index was up 79.15 points to 13,036.36, led by the gold sector. Bullion prices were boosted as traders reckoned that the economic damage resulting from the partial U.S. government shutdown will further delay any plans by the Federal Reserve to cut back on key stimulus.
Most sectors were higher amid relief that U.S. lawmakers have headed off a potential default but that feeling was muted by the fact that Republicans and Democrats will be locking horns again over the debt issue in just a few months.
It’s been a long, hard slog for the TSX which steadily lost ground from the summer of 2011, falling as low as 11,513 as the European debt crisis worsened, Chinese growth slowed and commodity prices fell.
“In a word, it’s commodities,” said Doug Porter, chief economist at BMO Capital Markets.
“Commodity prices are much lower than they were in the spring of 2011 and the Canadian equity market has been swimming upstream against that. But a number of commodities look to have stabilized finally and meanwhile the rest of the market is starting to perform well.”
Thursday’s advance leaves the TSX ahead up 4.84 per cent year to date while the Dow industrials has charged ahead 17 per cent. It also leaves the Toronto market well off the all-time high of 15,073 reached in June 2008, about two months before the collapse of Lehman Bros. sparked a financial crash.
The Canadian dollar was up 0.38 of a cent to 97.15 cents US while the U.S. dollar weakened after the Senate and House of Representatives passed a measure Wednesday night that reopens the government through Jan. 15 and permits the U.S. Treasury to borrow normally through Feb. 7 or perhaps a month longer.
“I think the peripheral risk here isn’t as much the lost output from the government shutdown,” said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
“It’s the longer ranging impact on overall confidence because it’s difficult to have investors want to invest when they’re not sure which way (the) government is going to go in the next month or the month after.”
U.S. indexes were mainly higher but markets were also pressured by weak earnings reports from IBM and Goldman Sachs and the Dow Jones industrials slipped 2.18 points to 15,371.65.
The Nasdaq gained 23.72 points to 3,863.15. The S&P 500 index added 11.61 points to close at a fresh, record high of 1,733.15.
The debt deal was reached just before a deadline when the U.S. borrowing authority was set to expire, which would’ve left the government unable to continue paying creditors.
Goldman Sachs’ posted third-quarter net earnings of US$1.52-billion, or $2.88 a share, up from $1.51-million, or $2.85 a share a year ago. Revenue fell to $6.72-billion from $8.35-billion a year earlier. Analysts expected earnings of $2.46 a share on revenue of $7.34-billion and its shares fell $3.93 to $158.32.
After the market close Wednesday, IBM said its third-quarter net income rose six per cent, but revenue fell and missed Wall Street’s expectations by more than $1-billion, pushing its stock down $11.90, or 6.37 per cent, to $174.83.
Worries that the U.S. deal only postpones the debt problems helped push most commodity prices lower.
But December bullion gained $40.70 to US$1,323 an ounce while the greenback weakened on the growing conviction that the Fed won’t be in a rush to taper its US$85-billion of bond purchases.
The gold sector ran ahead about 4.7 per cent. Goldcorp (TSX:G) improved by 85 cents to C$25.26 while Barrick Gold (TSX:ABX) climbed 83 cents to $19.06.
The base metals component rose 1.13 per cent even as December copper slipped one cent to US$3.30 a pound. Taseko Mines (TSX:TKO) ran up nine cents to C$2.27.
Financials were also supportive as Scotiabank (TSX:BNS) climbed 61 cents to $60.81.
Tech stocks led TSX decliners, down over one per cent with CGI Group (TSX:GIB.A) down $1.25 to C$37.16.
Shares in BlackBerry (TSX:BB) were two cents higher to $8.44 following a report that Chinese computer maker Lenovo is looking at buying the Canadian tech company. The Wall Street Journal reported that Lenovo has signed a non-disclosure agreement so it can go over BlackBerry’s finances.
The November crude oil contract on the New York Mercantile Exchange lost $1.62 to US$100.67 a barrel, its lowest level since early July, and the energy sector was slightly higher. Canadian Natural Resources (TSX:CNQ) fell 50 cents to C$33.26.