VANCOUVER, BRITISH COLUMBIA – (April 28, 2011) Clearlease Reports The Toronto stock market hovered in positive territory at midday Thursday as higher commodity prices and a slew of strong earnings reports outweighed news that U.S. first-quarter economic growth was slower than expected.
The S&P/TSX composite index added 23.2 points to 13,915.8 as the information technology and materials sectors led the market higher. The TSX Venture Exchange gained 0.5 points to 2,251.87.
The Canadian dollar added 0.20 of a cent to 105.42 cents US as the greenback fell against most other major currencies a day after the U.S. Federal Reserve announced it had no near-term intentions of changing its emergency low interest rate from near zero.
Fed chairman Ben Bernanke said rising commodity prices would likely have only a temporary effect on broader inflation in the United States.
Central banks raise interest rates to contain inflation and policy-makers overseas are already doing so. That makes the dollar less appealing to investors than the currencies of countries where rates are already higher and expected to rise further.
Commodities were higher, with the price of oil ahead $1.13 at US$113.89 a barrel on the New York Mercantile Exchange. Gold rose $19.40 to US$1,536.50 per ounce and copper was up three cents at US$4.26 a pound.
The U.S. government said the economy grew at a 1.8 per cent annual rate in the January-March quarter. That’s the weakest showing since last spring when the European debt crisis reduced growth to a 1.7 per cent pace, and a slower pace than many economists had been expecting.
But the U.S. GDP figures seem to be a blip as the North American economy remains strong, leading investors to focus instead on solid first-quarter earnings, said Paul Vaillancourt, vice-president at Canadian Wealth Management in Calgary.
“You’re going to start to see some pretty big blowout numbers, starting with energy this quarter but certainly next quarter.”
However, he added that investors have adopted a wait-and-see attitude and are holding back given that this week is heavy with economic data. Vaillancourt expects Canadian GDP figures set to be released Friday to show that the economy continues to grow.
“People are on the sidelines a little bit waiting to see if the recovery is as strong as people hope,” he said.
Meanwhile, energy and mining stocks are not performing as well as they had been previously despite a continued rise in commodity prices because some investors question whether prices can hold at such elevated levels, he said.
“Investors have lopped of 10 per cent or more off these energy and mining stocks that have been the darlings for the last couple of quarters and we’ll need to see continued solid earnings.”
The energy sector was up a slight 0.1 per cent, while the mining sector was the biggest drag on the TSX, down 0.8 per cent.
The information technology sector, up 1.4 per cent, led the main index higher with shares in market heavyweight Research in Motion (TSX:RIM) up 1.8 per cent or 97 cents at $53.75. The industry has been buzzing with rumours that the company could showcase new smartphones at its annual conference next week in Florida.
CGI Group (TSX:GIB.A) also boosted the sector. It was up 2.6 per cent or 52 cents at $20.54 after announcing a second-quarter profit of $117 million, up 43 per cent from $81.6 million in the same period last year.
Several key Canadian companies reported earnings that beat analyst expectations, including Potash Corp. of Saskatchewan (TSX:POT), which said its first-quarter profits hit a record $732 million. Still, its shares fell five cents to $54.13.
Other outperformers included the Jean Coutu Group Inc. (TSX:PJC.A), whose shares rose 19 cents to $10.64, and Domtar Inc. (TSX:UFS), up $1.45 at $87.70.
Maple Leaf Foods Inc. (TSX:MFI), narrowly beat analysts expectations by a penny with adjusted earnings of 18 cents per share. Sales revenues declined to $1.14 billion, in line with expectations. Shares gained 11 cents to $11.55 apiece.
Wall Street markets were mixed after the U.S. government said the economy slowed in the first three months of this year as higher prices for oil and gas constrained consumer spending.
The Dow Jones industrial average added 35.3 points to 12,726.2. The Nasdaq index was down 1.74 points at 2,868.14 while the Standard & Poor’s 500 index gained 2.7 points to 1,358.35.
In other U.S. economic news, the National Association of Realtors’ pending home sales index showed sales agreements for homes rose 5.1 per cent last month to a reading of 94.1. Sales were uneven across the country and were not enough to signal a rebound in the housing market.
Corporate earnings from U.S. companies were mixed.
In European trading, Britain’s FTSE 100 was 0.2 per cent higher. Germany’s DAX rose 0.7 per cent, and France’s CAC-40 gained 0.9 per cent.
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