TSX closes with an overall positive week

Updated: Fri Oct. 16 2009 4:41:37 PM

The Canadian Press

TORONTO — The Toronto stock market closed little changed Friday on a day when energy stocks drifted lower despite crude closing at its best level in a year and financials lost ground amid disappointing earnings reports from the U.S. financial sector.

The S&P/TSX composite index added a quarter of a point to 11,504.76 as the TSX found support from gold stocks, and finished the week 67.84 points or 0.59 per cent higher. The TSX Venture Exchange was 3.17 points higher at 1,331.57.

Investors also took in news that Canadian inflation remains deep in negative territory.

Statistics Canada reported that the consumer price index slid by one-tenth of a point last month to minus 0.9 per cent — matching a 53-year low that was also recorded in July. Much lower gasoline prices kept the overall index down. Aside from energy, annual inflation in Canada was well above zero in September at 1.3 per cent.

The Canadian dollar was lower for a second day, down 0.35 of a cent to 96.32 cents US.

The TSX energy sector was down 0.44 per cent even as the November crude contract on the New York Mercantile Exchange gained 95 cents to US$78.53 a barrel, building on Thursday’s sharp gain after the U.S. Energy Department released data showing a huge and unexpected drawdown in gasoline supplies. On the TSX, Suncor Inc. (TSX:SU) declined 40 cents to C$39.98.

New York markets closed firmly in the red following earnings reports from General Electric and Bank America.

GE posted a 44 per cent decline in profit to US$2.4 billion, or 23 cents per share, hurt by much lower earnings at its GE Capital arm, which lends money to businesses ranging from credit cards to shopping centres.

GE divisions that build dishwashers, sonogram machines, locomotives and wind turbines posted a modest profit increase. Despite better industrial results in the latest quarter, GE’s overall revenue fell 20 per cent to US$37.8 billion.

GE shares fell 71 cents, or 4.23 per cent, to $16.08.

And Bank of America said it lost more than US$2 billion after preferred dividends in the third quarter, steeper than what analysts had been expecting.

“It is, after all, the largest consumer bank and it may have just offered up a reminder that financial strains in the household sector haven’t gone away,” said David Rosenberg, chief economist and strategist at Gluskin Sheff.

The bank also set aside more than $11 billion to offset bad loans, $5 billion more than in the year-ago period. Its shares were down 84 cents or 4.64 per cent to $17.26.

The TSX financial sector fell 0.56 per cent, with CIBC (TSX:CM) down 68 cents to C$64.68. TD Bank (TSX:TD) dipped 66 cents to $65.24.

The Dow Jones industrials dropped 67.03 points to 9,995.91, gaining 131 points or 1.32 per cent this week.

The Nasdaq composite index lost 16.49 points to 2,156.8 despite solid earnings reports from Google Inc., and chipmaker Advanced Micro Devices after the closing bell Thursday.

The S&P 500 index fell 8.88 points to 1,087.68.

Doubts about American economic strength were raised after the University of Michigan’s consumer index for September fell to 69.4 from 73.5 in September. Economists had expected a reading of 73.5.

BMO Capital Markets senior economist Jennifer Lee observed the decline happened “even in a month that saw the equity market rally to its highest levels of the year.”

“Most of the deterioration was surprisingly in the expectations component, while the view on current conditions took a 1.3-point slip.”

Consumer sentiment had jumped by eight points last month to its highest level since January 2008.

Despite the relatively weak showing on the TSX for the past two sessions, some analysts think investors will just use the opportunity to buy back in at cheaper prices.

“I think the consensus view in the portfolio managers’ camp is the rally is happening, and if you’ve missed the rally you’re looking for those dips to buy back in,” said John Stephenson, portfolio manager First Asset Funds Inc.

“And so the market will ultimately push higher, maybe not at the rate that’s been going but it will ultimately go higher.”

The gold sector limited overall losses on the TSX, rising 1.2 per cent as the December bullion contract on the Nymex rose 90 cents to US$1,051.50 an ounce. Goldcorp Inc. (TSX:G) advanced 62 cents to $44.03.

In other corporate news, shares in Bombardier Inc. (TSX:BBD.B) rose seven cents to $5.03 after aviation analyst Benoit Poirier of Desjardins Securities said he’s confident the company’s new CSeries regional jet will add lots of value for the company. He estimates that the new 110- to 149-seat plane set to enter service in 2013 will be worth $1.20 per share for the company, raising its market capitalization by more than $2 billion a year.

Canadian Royalties Inc. (TSX:CZZ) showed its support for a takeover proposal from Jien Canada Mining Ltd. on Friday after the Chinese company increased its bid. Canadian Royalties signed a support agreement with Jien after a total cash offering of $192 million, including accrued interest on debentures, was put on the table and its shares surged 20 cents or 34.48 per cent to 78 cents.

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