The Canadian Press
The Toronto stock market was higher Thursday amid a fresh round of speculation that the Federal Reserve may start cutting back on its monetary stimulus early in the new year.
The S&P/TSX composite index gained 21.89 points to 13,451.9, held back by gold stocks as Fed tapering concerns continued to punish bullion prices.
The Canadian dollar was down 0.36 of a cent to 95.36 cents US.
The dollar backed off after Bank of Canada governor Stephen Poloz said he disagreed with an assessment Tuesday by the OECD that the central bank would have to start raising interests rates by the end of next year.
But Poloz told the Senate standing committee on banking, trade and commerce that the central bank's thinking on the issue is based on its own view of slack in the Canadian economy and the fact that inflation, at 1.1 per cent, is currently well below where he would like it to be.
The greenback also gained ground against other currencies in the wake of the release of the minutes of the last Fed meeting showed that the central bank would likely start tapering off its bond purchases in "coming months" if the job market improved further.
Fed members also weighed the possibility of slowing the US$85 billion of monthly blond purchases even without clear evidence of a strengthening job market.
New York markets were higher after losing ground Wednesday following the release of the Fed minutes as the Dow Jones industrials gained 52.14 points to 15,952.96.
The Nasdaq was ahead 22.39 points to 3,943.66 while the S&P 500 index rose 5.75 points to 1,787.12.
"Investors will try to make sense of the latest Fed signals," said BMO Capital Markets senior economist Alex Koustas.
"(The) Fed minutes didn't offer anything new, but even the mention of tapering was enough to send shivers."
The central bank's monthly purchase of assets bonds have kept long-term rates low and pushed investors into stocks. The quantitative easing has underpinned substantial gains on many markets this year. For example, the Dow industrials is up over 20 per cent.
The TSX on the other hand looks set to end the year with a gain in the high single digits, weighed down by sliding mining stocks.
On the commodity markets, January crude on the New York Mercantile Exchange gained 80 cents to US$94.65 a barrel. The energy sector gained 0.5 per cent. Talisman Energy (TSX:TLM) gained 13 cents to C$12.75.
Telecoms were also supportive with BCE (TSX:BCE) ahead 36 cents to $46.89.
The gold sector led decliners, down one per cent as speculation over Fed tapering continued to push gold prices lower with December bullion down $16.40 to US$1,241.60 an ounce. Barrick Gold (TSX:ABX) slipped 18 cents to C$17.76.
The base metals sector was down 0.35 per cent with December copper unchanged at US$3.16 a pound. Lundin Mining (TSX:LUN) shed four cents to $4.30.
On the corporate front, Target Corp.'s (NYSE:TGT) third-quarter net income dropped 47 per cent, stung by costs related to its expansion into Canada. Its adjusted profit beat analysts' estimates, but revenue fell short. The department store operator also lowered its full-year adjusted earnings forecast.
Target earned $341 million, or 54 cents per share. Removing Canada-related expansion costs and other items, earnings were 84 cents per share, 20 cents ahead of estimates and its shares fell $2.66 or four per cent to $63.83.
Clothing maker Gildan Activewear Inc. (TSX:GIL) fell $1.76 to $49.54 as it said its adjusted earnings came in at 83 cents a share, which was in line with analyst estimates. Net sales were up about 11 per cent to $628.1 million dollars, beating revenue estimates of $603.9 million.
Sears Holdings Corp.'s third-quarter loss widened as the ailing department store operator's results were hurt by weaker sales at its Kmart and Sears stores. Sears Holdings lost $534 million, or $5.03 per share. That compares with a loss of $498 million, or $4.70 per share, a year earlier. Revenue fell seven per cent to $8.27 billion from $8.86 billion and its shares fell 20 cents to $61.50.
European markets were mixed as further evidence emerged to show that the fragile economic recovery in the 17-country eurozone is already losing steam, just months after it emerged from its longest-ever recession.
Financial information company Markit said its purchasing managers' index, a gauge of business activity, fell in November to a three-month low of 51.5 from 51.9 the previous month. Most economists had been predicting a modest rise to around 52.
London's FTSE 100 index added 0.05 per cent, Frankfurt's DAX dipped 0.09 per cent and the Paris CAC40 declined by 0.39 per cent.