The Toronto stock market eked out a small gain Thursday, well off morning highs as gold stocks moved sharply into negative territory.
At the same time, traders were trying to gauge the likelihood of a U.S. federal government shutdown and the economic fallout from such an event.
The S&P/TSX composite index closed up 4.91 points to 12,841.62.
The Canadian dollar was unchanged at 96.96 cents (U.S.).
U.S. indexes were also off the best levels of the session. The Dow industrials gained 55.04 points to 15,328.3, the Nasdaq was ahead 26.33 points to 3,787.43, and the S&P 500 index rose 5.9 points to 1,698.67 as two financial deadlines for the U.S. government loom.
Congress needs to pass a funding bill to keep the federal government operating after Oct. 1, when its new fiscal year starts. And the U.S. borrowing limit needs to be raised before Oct. 17.
The Dow and the S&P 500 had fallen for five trading days before the slight revival on Thursday.
Markets are nervous as investors remember the summer of 2011 when a similar situation roiled markets at a time when Europe’s debt crisis was flaring and prompted Standard & Poor’s to strip the U.S. of its triple A credit rating.
“Sometimes, fundamentals run markets and sometimes fear and greed run markets and I think it’s the fear thing obviously with the debt ceiling,” said Michael Greenberg, portfolio manager/research analyst at Franklin Multi-Asset Strategies, adding that long-term prospects look positive.
“We’re kind of looking out six to nine months, where are we going to be and I think we are higher from here. But there will be some volatility because of governmental shenanigans but it’s something we have to live with.”
President Barack Obama has said he won’t negotiate on the debt limit. But positions appeared to harden mid-morning after House Speaker John Boehner said that “it doesn’t work that way” and that Americans don’t want either Obamacare or a government shutdown.
Obama responded, saying the Affordable Care Act “is here to stay.”
There was good news on the U.S. housing front as a report showed that average U.S. rates on fixed mortgages fell this week to 4.32 per cent, their lowest in two months. The decline follows the Federal Reserve’s decision last week to hold off slowing its monthly bond purchases.
Commodity prices were generally higher and the base metals sector rose 0.75 per cent as December copper gained three cents to $3.31 (U.S.) a pound. Teck Resources rose 71 cents to $29.29 (Canadian).
The energy sector was ahead 0.5 per cent as the November crude contract on the New York Mercantile Exchange moved up 37 cents to $103.03 (U.S.) a barrel. Suncor Energy was 24 cents higher to $37.33 (Canadian).
A Norwegian energy firm, Statoil, is estimating that an untapped oil field off Canada’s east coast contains between 300 and 600 million barrels of recoverable oil, making it one of the biggest discoveries in recent years. Calgary-based Husky Energy, another major producer in Newfoundland’s current offshore oil fields, is Statoil’s partner in the area, with a 35 per cent working interest in three discoveries. Husky shares were ahead $1.20 to $30.26.
Telecoms also supported the TSX.
Rogers Communications Inc. and U.S. wireless carrier Sprint Corp. say they will offer Canadians a high-speed Internet access in their vehicles. The cost of the project, pricing for the services and dates for the roll-out weren’t included in a joint statement issued by the companies, which have two of North America’s largest telecommunications networks. Rogers was ahead 18 cents to $45.09.
The gold sector fell about two per cent as bullion prices headed lower with the December contract in New York down $12.10 to $1,324.10 (U.S.) an ounce. Goldcorp Inc. faded 36 cents to $26.48 (Canadian).
Barrick Gold Corp. said the Supreme Court of Chile has upheld rulings that require the miner to complete a water management system for the Pascua-Lama mining project to the satisfaction of the country’s environment ministry before resuming construction. Barrick has submitted a plan that estimates completion of the water management system by the end of 2014. Its shares were 21 cents lower to $19.08.
BlackBerry had another losing session. Its shares drifted four cents lower to $8.22 on the TSX after one of its smartphone suppliers, Jabil Circuit, said it was moving ahead with plans to end its partnership agreement, raising new questions about whether the Canadian company will soon exit the handset business.
Its shares had headed higher in the morning following a six per cent slide Wednesday after Fairfax Financial chief executive Prem Watsa said that he has every intention of completing the acquisition of the smartphone maker. Fairfax has proposed to take the company private with a consortium of unnamed financiers for $9 (U.S.) per share.