Toronto market climbs amid falling commodities, strong U.S. manufacturing data

TORONTO -- The Toronto stock market closed higher Monday as the latest manufacturing data pointed to continued recovery in the American economy even though U.S. Thanksgiving holiday sales were mixed.

The S&P/TSX composite index climbed 24.17 points to 13,419.57, while the Canadian dollar hovered near levels not seen since June 2010. The loonie closed down 0.18 of a cent at 93.98 cents U.S.

Wall Street indexes were lower, as the Dow Jones industrials pulled back 77.64 points to 16,008.77, the Nasdaq dipped 14.63 points to 4,045.26 and the S&P 500 index fell 4.91 points to 1,800.90.

The Institute for Supply Management reported that factories increased production and hiring amid a large number of new orders last month. Its index of manufacturing activity rose in November to 57.3 from 56.4 in October and was the highest since April 2011. A reading above 50 indicates growth.

Jennifer Dowty, an associate portfolio manager with CIBC Global Asset Management, said the latest reading was "continued evidence" that the U.S. economy is steadily recovering.

Meanwhile, economic news from China was also positive, with the HSBC purchasing managers' index for November coming in at 50.8. Although the reading was down slightly from 50.9 in October, it was still the second-highest level in eight months and an improvement from a preliminary reading of 50.4 released earlier last month. Typically, numbers above 50 indicate an expansion.

Investors in the U.S. returned after a lacklustre Friday session, which was shortened due to the Thanksgiving holiday.

A survey with 4,500 shoppers conducted for the National Retail Federation found that total spending over four-day Thanksgiving holiday weekend was expected to fall for the first time since 2006. But figures for Cyber Monday forecast that 131 million people were going to shop online, up about two per cent from last year.

Dowty said U.S. investors are wary of making major moves until the latest payrolls data is released on Friday, which may provide more hints about whether the Federal Reserve will decide to cut back its US$85 billion of monthly bond purchases at its next meeting on Dec. 18. The Fed's stimulus has kept interest rates low and helped drive equities markets higher this year.

The consensus is that the U.S. central bank will not begin to taper until the new year. But positive payroll figures, new home sales and the final revision to third quarter GDP, may have the potential to change the Fed's mind.

In corporate news, Talisman Energy Inc. (TSX:TLM) says two representatives of activist investor Carl Icahn will join its board.

One of Icahn's representatives will sit on the board committee searching for a successor to Hal Kvisle, who plans to step down as Talisman's president and chief executive next year. Icahn revealed through regulatory documents in October that he had acquired about six per cent of Talisman's stock and has since increased his holdings to about seven per cent.

Last month, Talisman announced it would sell 75 per cent of its assets in northeastern B.C.'s Montney formation to Progress Energy Canada Ltd., a subsidiary of Malaysia's Petronas, for $1.5 billion. Shares rose 4.18 per cent or 52 cents to $12.95.

The Toronto Stock Exchange saw gold, materials and metals and mining all decline. The gold sector was the leading decliner, dropping 4.93 per cent as February bullion fell $28.50 to US$1,221.90 an ounce.

Shares in the one of the world's largest gold companies, Barrick Gold (TSX:ABX), fell more than six per cent, or $1.07 to $16.54 following reports that founder Peter Munk plans to soon step aside as co-chairman. The company refused to comment Monday, except to say it will provide an update later this week.

Dowty said gold prices will likely continue to feel pressured.

"The U.S. economy is steadily recovering and gold, being a safe haven, is not a place that investors need to be right now," she said.

Other commodities were mixed as the January crude contract on the New York Mercantile Exchange climbed $1.10 to US$93.82 a barrel as the sector saw an uptick of 0.62 per cent. The metals and mining sector on the TSX fell 1.90 per cent as March copper dropped two cents to US$3.18 a pound.

It's going to be a heavy earnings week as the country's major banks report fourth-quarter and full-year results, with the Bank of Montreal (TSX:BMO) kicking it off on Tuesday.

Meanwhile, traders will also watch an announcement by the Bank of Canada on Wednesday on whether its trend-setting rate remains at one per cent, where it's been since late 2010.