China optimism helps send TSX higher
Malcolm Morrison, The Canadian Press
Published Monday, May 12, 2014 7:33AM EDT
Last Updated Monday, May 12, 2014 2:34PM EDT
TORONTO -- Rising miners helped give the Toronto stock market a solid gain as copper prices jumped in response to moves to open up Chinese markets.
The S&P/TSX composite index gained 85.35 points to 14,619.41.
Base metal miners advanced after China's cabinet promised late last week to allow local governments to issue bonds and streamline the approval process for initial public stock offerings, a move that was seen as widening market access.
At the same time, analysts say markets have become more comfortable with more realistic growth expectations from the world's second-biggest economy.
"We're no longer talking about double-digit growth," said Monika Skiba, senior portfolio manager at Manulife Asset Management.
"But I think as long as we see seven, 7.5 per cent GDP growth, and I think that's what the Chinese government seems to be comfortable with as well, that bodes well for commodities in terms of being stable. And it's also good for the Canadian market."
The Canadian dollar edged 0.04 of a cent higher to 91.82 cents US.
On the merger and acquisition front, Botox-maker Allergan rejected the US$48-billion hostile takeover bid by Quebec-based Valeant Pharmaceuticals International Inc. (TSX:VRX). It says the bid undervalues Allergan, isn't in the best interests of the U.S. company and creates risks and uncertainties for its shareholders. The California-based company also says the offer doesn't reflect its future earnings and growth. Valeant shares dropped $2.12 to $140.84.
U.S. indexes were higher as the Dow Jones industrials ran up 101.47 points to 16,684.81, the Nasdaq gained 62.36 points to 4,134.23 and the S&P 500 index was ahead 15.74 points to 1,894.22.
The base metals sector led TSX advancers, up 3.4 per cent while July copper gained seven cents to US$3.15 a pound.
June bullion added $8.20 to US$1,295.80, pushing the gold sector up one per cent.
The energy sector climbed 1.03 per cent while June crude ran up 56 cents to US$100.55 a barrel.
Traders also kept a wary eye on the Ukraine crisis as pro-Russian insurgents in the country's Donetsk region declared it an independent state and asked to join Russia after a hastily organized referendum in which organizers say overwhelming numbers of voters backed sovereignty.
Meanwhile, the European Union added 13 more people, and two enterprises to its Ukraine list for visa bans and asset freezes.
Investors also looked ahead to a busy week for economic news that should reassure investors that the U.S. economy is recovering from the damage caused by a severe winter.
The April reading on U.S. retail sales will be released on Tuesday, capacity utilization and industrial production data Thursday and April housing stars numbers along with the May reading on consumer confidence from the University of Michigan on Friday.
Together, they are expected to indicate that the U.S. economy will run ahead 3.8 per cent in the second quarter after likely contracting in the January-March period.
Statistics Canada releases the March report on manufacturing shipments on Thursday.