TSX rises amid Chinese manufacturing data
TORONTO - The Toronto stock market closed modestly higher Thursday as resource stocks found little support despite a further indication that China is digging itself out of a slump and Apple shares tumbled after a disappointing earnings report and outlook.
The S&P/TSX composite index gained 29.57 points to 12,823.62, while the TSX Venture Exchange fell 12.07 points to 1,229.46.
The Canadian dollar closed below parity with the American currency for the first time since mid-November.
The loonie moved down 0.39 of a cent to 99.71 cents US on top of a loss of just shy of two-thirds of a cent Wednesday after the Bank of Canada cut its economic forecast. The central bank also kept its key rate at one per cent and indicated that it won't move rates higher until 2014.
U.S. indexes were mainly higher amid economic data showing that the number of Americans seeking unemployment aid fell last week to the lowest level in five years.
The U.S. Labour Department said Thursday that weekly unemployment benefit applications dropped 5,000 to a seasonally adjusted 330,000. The less volatile, four-week average fell to 351,750.
The Dow Jones industrials gained 46 points to 13,825.33 while the S&P 500 inched up 0.01 of a point to 1,494.82 after earlier moving above the 1,500 level for the first time since Dec., 2007.
The Nasdaq fell 23.29 points to 3,130.38 as Apple Inc. stock tumbled 12.35 per cent to US$450.50, down sharply from its 52-week high of just over $700. The company warned Wednesday after the close that the huge sales growth of the last five years is slowing drastically as iPhone sales are starting to plateau.
Apple’s net income in the fiscal first quarter was US$13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share. But it was the first time in years that Apple didn’t post a double-digit earnings increase.
"Apple got driven sharply higher last year on sentiment and now the sentiment has turned. It can be quite vicious when that happens," said Norman Raschkowan, North American strategist for Mackenzie Financial Corp.
"As tech companies mature, they can still have very attractive margins but their earnings and revenue growth does slow. It doesn’t mean they aren’t great companies, but the market doesn’t value them anymore as a growth stock and that’s partly what’s happening here."
Apple rival Research In Motion (TSX:RIM) started the session down five per cent but RIM later ran ahead 2.89 per cent to $17.80 on word that Chinese computer maker Lenovo wants to grow its presence in the mobile device sector and would have a look at RIM.
Research In Motion stock has run up sharply ahead of the unveiling of its new BlackBerry 10 product line Jan. 30, rising more than $4 since the beginning of January. The Waterloo, Ont.,-based company has been looking at its strategic options under pressure from some investors and analysts who advocate that the company split apart the hardware and services sides of its business.
The tech sector was the leading TSX group with Celestica Inc. (TSX:CLS) ahead 11 cents to $8.33.
The telecom sector was ahead 0.83 per cent as Telus Corp. (TSX:T) shot up $1.09 to $65.74.
Financials were also positive as Manulife Financial (TSX:MFC) climbed 12 cents to $14.79.
The TSX energy sector was higher amid good news from the world's second-biggest economy as China’s manufacturing sector crept higher in January to the fastest pace in two years. A preliminary version of HSBC’s monthly purchasing managers’ index rose for the fifth month in a row to 51.9 in January from 51.5 in December. Readings above 50 on the 100-point scale indicate expansion.
The report is further evidence that China’s economy is undergoing a modest recovery from a downturn sparked by the 2008 world financial crisis.
The Chinese data helped push oil prices higher.
The March crude contract on the New York Mercantile Exchange gained 72 cents to US$95.94 a barrel. The energy sector gained 0.66 per cent and Canadian Natural Resources (TSX:CNQ) rose 49 cents to C$30.67.
The gold sector was the leading decliner, down about 2.6 per cent as bullion also fell back with the February contract on the Nymex down $16.80 to US$1,669.90 an ounce. Barrick Gold Corp. (TSX:ABX) faded 63 cents to C$33.46 and Goldcorp Inc. (TSX:G) declined 83 cents to $36.39.
Copper prices were a cent lower at US$3.68 a pound and the base metals sector lost early momentum to move down almost one per cent. Thompson Creek Metrals (TSX:TCM) was down 17 cents at C$4.25.
Major Drilling Group International Inc. (TSX:MDI) shares plunged $1.83 or 15.25 per cent to $10.17 as it warned Wednesday after the close that revenue in its fourth quarter is expected to be lower than expected. It said revenue will be hurt by delays at some of its senior customers who have been stalled in setting their 2013 exploration drilling plans.
In other earnings news, mobile phone maker Nokia Corp. fell 8.19 per cent to US$4.26 as it reported a fourth-quarter net profit of €202 million but revenue in the period fell 20 per cent to €8 billion from a year earlier. The Finnish company gave a poor outlook saying it expects operating margins in the first quarter 2013 to be "approximately negative two per cent, plus or minus four percentage points." Nokia cited increased competition as it struggles against the dominance of market leaders Samsung and Apple Inc.’s iPhone.
In other corporate news, Agrium Inc. (TSX:AGU) said its preliminary estimates show fourth-quarter earnings were above previous guidance. The Calgary-based fertilizer producer says it earned slightly more than $2 per diluted share, excluding certain items. The guidance had been for between $1.50 to $1.90 per share and its shares gained $3.25 to C$113.90.
After markets closed, Microsoft Corp. (Nasdaq:MSFT) reported that its earnings for the latest quarter slipped four per cent, despite a lift from the latest version of Windows. Microsoft earned US$6.4 billion, or 76 cents per share, in the final three months of the year, down from $6.6 billion, or 78 cents, a year earlier. Total revenue rose three per cent from last year to US$21.5 billion.
In initial after-hours trading, Microsoft stock was down 54 cents, or 1.95 per cent, at US$27.10.
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