Canada’s benchmark index turned in an impressive gain on Monday, even as U.S. indexes barely moved, following upbeat economic data from China and clarity from Ottawa on what foreign takeovers it would tolerate.
The S&P/TSX composite index closed at 12,230.47, up 70.88 points or 0.6 per cent. In the United States, the S&P 500 closed at 1418.55, up 0.48 point or nearly zero per cent. The blue-chip Dow Jones industrial average closed at 13,169.88, up 14.75 points or 0.1 per cent.
The gains in Canada followed clarification from Ottawa on Friday on what takeovers it would allow. While agreeing to recent offers for Nexen Inc. and Progress Energy Resources, it shut the door on further takeovers by state-controlled companies, creating a mixed landscape for investors.
Nexen shares, which had slumped on Friday before the announcement, surged 13.5 per cent. Progress shares rose 13.4 per cent. However, a number of other energy stocks fell on the belief that they were no longer attractive to firms like China-controlled CNOOC. Athabasca Oil fell 2.4 per cent and Canadian Oil Sands Ltd. 1.1 per cent.
Meanwhile, commodity producers were also given a boost by upbeat economic news from China. The country reported that its factory output rose 10.1 per cent in November, while its retail sales rose 14.9 per cent. Both reports added to the impression that the economy was improving and would likely avoid a much-feared hard-landing.
Among Canadian commodity producers, Barrick Gold Corp. rose 1.5 per cent and Teck Resources Ltd. rose 2.1 per cent.
Precision Drilling Corp. rose 5.8 per cent after it said it would cut capital spending to $485-million in 2013 but start paying a dividend of 5 cents a share near the end of this year.
McDonald’s Corp. rose 1.1 per cent after it reported a 2.4 per cent gain in its global sales in November, for restaurants open for at least 13 months. However, the U.S. market saw the biggest gains, at 2.5 per cent, while sales in Asia/Pacific, Middle East and Africa rose just 0.6 per cent. McDonald’s sales had fallen in October for the first time in nine years.
In Europe, Italy’s prime minister Mario Monti said he would resign, raising concerns about how the country will deal with its debt crisis. Yields on Italy’s 10-year government bond jumped 29 basis points, to 4.8 per cent, reflecting these concerns. The yield had recently fallen to its lowest level in two years.