TORONTO – The Toronto stock market closed little changed Monday amid hints about further stimulus measures for Europe and hopes for another strong run of bank earnings in Canada.
The S&P/TSX composite index rose 7.59 points to 14,715.69 with volume light because New York markets were closed for the U.S. Memorial Day holiday.
There was also major news on the merger and acquisition front as Pfizer said it does not intend to make a takeover offer for British drugmaker AstraZeneca. The announcement Monday came a week after AstraZeneca’s board rejected a proposed US$119-billion buyout offer from Pfizer, the world’s second-biggest drugmaker by revenue. Pfizer had been waiting for AstraZeneca to engage in merger talks by a Monday deadline.
The Canadian dollar rose 0.08 of a cent to 92.08 cents US.
European Central Bank president Mario Draghi said the bank could engage in large-scale bond purchases to combat the negative spiral of low inflation if need be. Draghi’s remarks held out the prospect for action to stimulate the weak eurozone recovery at the ECB’s next governing council meeting June 5.
The meeting will take place against the background of a slow recovery in the 18 countries that share the euro currency and concern that Europe may fall into a crippling downward price spiral.
“His tone has certainly shifted over the past few months or so; the comments like the one we saw overnight certainly reinforced that thesis,” said Jean-Francois Dion, portfolio adviser at RBC Wealth Management.
“Most economists think we will see some outright quantitative easing next month.”
The base metals sector led TSX advancers, up 0.76 per cent. Commodity markets were closed in New York, but July copper gained two cents to US$3.19 a pound in electronic trading.
The financials sector was also supportive, up 0.2 per cent as traders look to take in earnings from National Bank (TSX:NA) and Scotiabank (TSX:BNS) on Tuesday, Bank of Montreal (TSX:BMO) on Wednesday and CIBC (TSX:CM) on Thursday.
Hopes are high for another string of solid reports after Royal Bank (TSX:RY) and TD Bank (TSX:TD) posted earnings last week that blew past expectations, with strong contributions from major divisions and lower loan loss provisions.
“Overall, good numbers and expectations have certainly shifted higher following the numbers from TD and Royal,” added Dion.
“Sentiment towards the banks has certainly improved quite a bit here over the past few months or so. Initially there was quite a bit of concern around the Canadian housing market potential for a hard landing. That seems to have been sort of washed out to some extent . . . and that has certainly helped rerate some of the banking stocks.”
The energy sector was flat as July crude moved down 17 cents to US$104.18 a barrel.
The gold sector was the major decliner, down 0.25 per cent even as June bullion gained 90 cents to US$1,292.6 an ounce.
In other corporate developments, Canadian Tire (TSX:CTC.A) shares jumped $1.76 to $105.20 as the retailer signed a multi-year deal with TSN that will see the sports broadcaster develop and produce content for the retailer’s traditional and digital marketing channels, including traditional and digital flyers, social media and online advertising and in-store advertising.