Earnings, manufacturing data boost TSX

A man walks past a building in Toronto that used to house the Toronto Stock Exchange on Thursday, August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim

TORONTO - Strong earnings from the energy sector and a solid reading on U.S. manufacturing pushed the Toronto stock market higher Tuesday.

The S&P/TSX composite index rose 40.09 points to 12,332.79 while the TSX Venture Exchange was up 7.64 points at 1,431.68.

Shares in Suncor Energy Inc. (TSX:SU), Canada’s largest energy company, were up 31 cents to $32.94. The company booked quarterly operating earnings, adjusted for one-time items, of $1.33 billion or 85 cents per share. That beat the average estimate of 81 cents per share.

Canadian Oil Sands Ltd. (TSX:COS) said first-quarter profits were $321 million, or 66 cents per share, down from $324 million, or 67 cents per share, a year ago. Revenue was $1.04 billion, up from $1.01 billion. Analysts polled by Thomson Reuters were on average expecting earnings of 54 cents per share and revenue of $944 million. Its stock advanced $1.22 to $23.05.

"I think what you’re seeing is that oil remained at a fairly stable, lofty price through the first quarter and I think that had a bit of a positive impact to the earnings of these companies," said Phillip Petursson, director of institutional equities at Manulife Asset Management.

"The sustainability of that going forward is a bigger question."

Oil prices have stayed well above the US$100 mark since mid-February on concerns connected with Iran’s nuclear program and hopes for stronger economic growth. The June crude contract on the New York Mercantile Exchange was up $1.29 a US$106.16 a barrel.

But traders are closely eyeing the impact of Europe’s debt crisis on economic activity. Spain said Monday its economy slipped into recession in the first quarter.

Solid manufacturing data from the U.S., Canada's largest trading partner, pushed the Canadian dollar up 0.22 of a cent to 101.44 cents US.

The Institute for Supply Management's index on manufacturing came in better than expected. The ISM report showed continued expansion, with the index coming in at 54.8 against the 53 reading that economists had forecast. It also improved on the March reading of 53.4.

"It’s a very good reading on the outlook for the U.S. economy," said Petursson, who pointed out that the survey’s components for orders, production and employment all put in strong showings.

The Dow Jones industrial average climbed 65.69 points to 13,279.32.

The Nasdaq composite index rose 4.08 points to 3,050.44 while the S&P 500 index added 7.91 points to 1,405.82.

The TSX finished the session well off early highs in part due to Research In Motion (TSX:RIM). Stock in the BlackBerry maker closed down 82 cents or 5.8 per cent to $13.31 after RIM CEO Thorsten Heins unveiled the prototype for the new BlackBerry 10 operating system at the BlackBerry World 2012 conference in Orlando, Fla.

The Suncor and Canadian Oil Sands earnings helped take the energy sector up 1.2 per cent while oil prices edged higher following the U.S. ISM report.

Shares in Talisman Energy (TSX:TLM) declined 40 cents to $12.52 as the energy company said it had a US$291-million profit in the first quarter due to increased cash flow and lower expenses, which helped the international oil and gas producer beat analyst earnings estimates. Net income was 28 cents per share for the quarter, seven cents better than forecast.

The industrials sector also supported the TSX after WestJet Airlines (TSX:WJA) announced that it has selected Bombardier Inc. (TSX:BBD.B) to supply the propeller aircraft it requires for a new regional service. WestJet will take delivery of up to 45 of the Bombardier Q400 planes over the next six years.

WestJet also handed in a record first-quarter profit of $68.3 million or 49 cents per diluted share, up from $48.2 million or 34 cents per diluted share in the first quarter of 2011. Revenue was nearly $891 million, up from $772.4 million a year earlier.

WestJet shares jumped 29 cents to $14.52 while Bombardier was two cents higher at $4.20.

The base metals sector was up 0.68 per cent while the May copper contract was ahead a penny at US$3.84 a pound.

The sector was also lifted by uranium producer Cameco Corp. (TSX:CCO) as it said quarterly net income was up 45 per cent from a year earlier, rising to $132 million or 33 cents per share before adjustments while revenue increased 22 per cent to $563 million. On an adjusted basis, Cameco’s profit was $124 million or 31 cents per share, three cents per share above expectations and its stock ran ahead 61 cents to $22.47.

The gold sector was slightly higher even as the June bullion contract declined $1.80 to US$1,662.40 an ounce. Lake Shore Gold (TSX:LSG) rose nine cents to $1.05.

Traders were also encouraged after China’s manufacturing sector expanded for a fifth straight month in April.

The state-affiliated China Federation of Logistics and Purchasing said Tuesday that its purchasing managers index, or PMI, rose 0.2 percentage points to 53.3 per cent in April, up from March’s 53.1 and February’s 51.0.

The world’s second-biggest economy has been an important prop for a slowly recovering global economy. But there has been nervousness as Beijing tries to engineer a soft landing for its economy as it battles high inflation.

China’s economic growth declined to 8.9 per cent in the final quarter of last year after Beijing hiked interest rates and tightened other controls.