TSX rises as China's economy beats expectations
Malcolm Morrison, The Canadian Press
Published Wednesday, April 16, 2014 5:40AM EDT
Last Updated Wednesday, April 16, 2014 5:06PM EDT
TORONTO -- The Toronto stock market registered a strong advance Wednesday amid signs that economic growth in China held up better than expected in the first quarter.
The S&P/TSX composite index soared 142.6 points to 14,446.52 after the world's second-largest economy reported growing at an annualized rate of 7.4 per cent in the January-March period, down from the previous quarter's 7.7 per cent. It was the weakest growth in China since the 2008-09 global crisis but the number was still better than what many analysts had expected.
"A lot of investors were fearing the worst (because) a lot of the economic data out of China has been quite soft over the last little while," noted Allan Small, senior adviser at Holliswealth.
"If (growth) stays in this range, there's nothing to worry about."
The Canadian dollar was down 0.34 of a cent to 90.76 cents US after the Bank of Canada said it was keeping its key rate unchanged at one per cent. The bank also lowered its forecast for first-quarter growth this year to 1.5 per cent from 2.5 per cent, but attributed the downgrade mostly to temporary impacts of a unusually severe winter.
New York indexes also finished sharply higher amid good news on the U.S. economy. The Federal Reserve`s latest regional survey showed that the economy picked up over the past two months as bitter winter weather subsided.
The Dow Jones industrials ran ahead 162.29 points to 16,424.85, the Nasdaq gained 52.07 points to 4,086.23 and the S&P index points climbed 19.33 points to 1,862.31.
Earnings news also lifted markets as supermarket chain Metro Inc. (TSX:MRU) posted adjusted earnings of $1.07 per share, five cents higher than analysts had expected. Overall sales were up 1.7 per cent year over year, rising to $2.55 billion from $2.51 billion and Metro shares were up $1.58 or 2.46 per cent to $65.86.
In the U.S., Yahoo's earnings per share ex-items were 38 cents, a penny higher than analyst forecasts and its shares jumped $2.14 or 6.26 per cent to $36.35. Net earnings were US$312 million, or 29 cents per share compared with $390 million or 35 cents per share a year earlier.
After the close, Google disappointed, posting earnings per share ex-items of $6.26, 15 cents short of estimates. Revenue of $15.42 billion was short of the $15.54 billion that analysts expected and its shares fell five per cent in after-hours trading.
Prices for metals rose in the wake of the Chinese economic data with May copper up four cents to US$3.06 a pound and the base metals sector gained 1.19 per cent.
The energy sector rose 1.5 cent even as the May crude contract shed most early gains as data showed that U.S. inventories rose more than four times the amount expected last week to 10 million barrels. Oil inched up a penny to US$103.76 a barrel.
The gold sector slipped about 0.3 per cent as June bullion gained $3.20 to US$1,303.50 an ounce.
There was a major acquisition in the gold sector that will see Yamana Gold Inc. (TSX:YRI) and Agnico Eagle Mines (TSX:AEM) jointly acquire 100 per cent of Osisko Mining (TSX:OSK) in a cash and stock deal worth $3.9 billion. The companies are paying Osisko $8.15 a share. The offer represents an 11 per cent premium to a hostile bid for Osisko that had been mounted by Goldcorp (TSX:G).
"You're going to see a lot of this kind of mergers and acquisitions because the price of gold has dropped by so much and a lot of these companies now are not expanding based on any more gold in the ground -- they're having to acquire other companies to expand," Small said.
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