TORONTO - Strong advances by mining and energy stocks sent the Toronto stock market up over 100 points for a second session Wednesday afternoon as investors continued to pick up commodity stocks driven lower during a string of losses last week.
New York indexes had a tough time capitalizing on sizable gains from Tuesday as investors took in tame wholesale inflation in the U.S. and hoped a bottom is at hand in the subprime mortgage meltdown after HSBC Holdings and Bear Stearns announced big writedowns.
A woman talks on a mobile phone in front of a screen showing the Hang Seng Index outside a bank in Hong Kong Wednesday. THE ASSOCIATED PRESS/Kin Cheung
"The problem with sentiment is that it can sometimes only last 10 minutes," observed Gareth Watson at Scotia McLeod.
"(It's) a market where the views, the outlooks, going into next year I think are so divergent that it is creating this market where you have more-than-willing buyers and more-than-willing sellers and it's just a matter from day to day as to whose sentiment is winning out."
Toronto's S&P/TSX composite index was up 158.92 points to 13,864.06.
The TSX Venture Exchange headed 39.34 points higher to 2,985.66 while the Canadian dollar continued volatile, up around three quarters of a cent early this morning but down 0.64 cent to 103.62 cents US at mid-afternoon after Bank of Canada's senior deputy governor, Paul Jenkins, said the dramatic rise in the dollar is putting Canada's economic growth in peril.
On Wall Street, the Dow Jones industrials edged up 22.68 points to 13,329.77 after lower oil prices and a bullish report from Wal-Mart stores ignited a 319.54-point surge in the previous session.
The Nasdaq composite index lost 2.2 points to 2,671.45 and the S&P 500 index maintained a gain of 4.61 points to 1,485.66.
Britain's HSBC Holdings said Wednesday it will have to write off a further US$3.4 billion from its U.S. business during the third quarter because of exposure to subprime loans. However, strong growth from Asia and the Middle East are offsetting those losses.
Bear Stearns said it sees writedowns of about US$1.2 billion in the fourth quarter but it remains "pretty positive" about its investment banking business. Its CFO said this latest round of writedowns should "suffice" in accurately valuing products such as subprime mortgages and collateralized debt obligations. Its shares were up 4.4 per cent to US$105.35.
On Tuesday, Royal Bank of Canada (TSX:RY) said it will record a C$360-million charge related to losses in the U.S. subprime mortgage market, but will also post a $325-million gain for Visa credit card restructuring.
And Scotiabank (TSX:BNS) disclosed it will book writedowns totalling $190 million on non-bank asset-backed commercial paper and structured credit instruments.
Scotiabank's gain on its interest in Visa Inc., which plans a major IPO, is $200 million before tax.
But the TSX financial sector turned flat by the afternoon although Royal was up 14 cents to $52.26, Scotiabank was 44 cents higher to $51.30 but CIBC (TSX:CM) declined $2.68 to $92.12.
On the economic front, the U.S. Labour Department reported Wednesday that wholesale inflation edged up just 0.1 per cent last month, far below the 1.1 per cent jump in September, thanks to falling energy prices.
Core wholesale inflation, which excludes food and energy, showed no change after a tiny 0.1 per cent gain in September.
The data boosted hopes that inflation numbers such as these will persuade the Federal Reserve to cut interest rates again next month.
U.S. retail sales edged up 0.2 per cent in October, compared with the previous month. It was the weakest showing since a 0.1 per cent rise in August and represented a significant slowdown from a 0.7 per cent jump in September sales.
On the TSX, the base metals sector improved 4.36 per cent as Teck Cominco Ltd. (TSX:TCK.B) climbed $1.80 cents to $43.50 and Equinox Minerals (TSX:EQN) moved up 32 cents to $5.05.
The energy sector headed 1.57 per cent higher as oil prices rose following two days of declines that shaved about US$5 from the price of a barrel of crude. The December contract on the New York Mercantile Exchange gained $2.53 to US$93.70 a barrel. Suncor Energy (TSX:SU) advanced $2.50 to $100.31 and Canadian Natural Resources advanced $1.34 to $73.17.
Gold prices also advanced as the December bullion contract on the Nymex climbed $15.70 to US$814.70 an ounce, taking the gold sector up 2.24 per cent. Barrick Gold (TSX:ABX) gained 82 cents to $41.49 while Kinross Gold Corp. (TSX:K) moved ahead 45 cents to $17.49.
Tech stocks were also supportive with Research in Motion Ltd. (TSX:RIM) ahead $2.56 to $110.34.
Information-technology services firm CGI Group Inc. (TSX:GIB.A) is anticipating continued growth in 2008 after capping its fiscal year by boosting fourth-quarter earnings 66 per cent to $65.6 million and winning a $91.8 million federal contract. Shares in the Montreal-based firm moved up 60 cents to $10.46.
In other company developments, ATS Automation Tooling Systems Inc. (TSX:ATA) shares tumbled $1.05 or 15.7 or 17.36 per cent to $5 after the company fell short of expectations Tuesday by reporting a loss of $18.8 million, or 28 cents per share, after analysts anticipated a loss of two cents per share.
Shares in workout wear purveyor Lululemon (TSX:LLL) fell $1.70 to $39.80 after the New York Times published results of a survey questioning whether its VitaSea clothing contains seaweed which, according to product tags, "releases marine amino acids, minerals and vitamins into the skin upon contact with moisture."
Molybdenum producer Thompson Creek Metals Co. (TSX:TCM) says a slide has interrupted some operations at its open-pit Endako Mine in northern British Columbia. Its shares dropped 69 cents to $21.30.
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