Toronto stock market plays catch up with U.S. indexes as BlackBerry shares dip

TORONTO – The Toronto stock market closed the week with a strong advance as it played catch-up with U.S. indexes after being shut for Christmas and Boxing Day.

The S&P/TSX composite index closed up 69.96 points to 13,587.98 on Friday — the highest level since May 2011.

Meanwhile, the loonie fell 0.75 of a cent to 93.42 cents US, its lowest since February 2010, even as the U.S. dollar weakened against the euro.

The gain on the TSX came as the market also digested news that BlackBerry co-founder Mike Lazaridis had cashed in $26 million worth of shares in the struggling smartphone company.

The transaction, reported after markets closed early on Tuesday, brought Lazaridis’ stake in the tech company down to five per cent. BlackBerry (TSX:BB) shares dipped 5.09 per cent, or 42 cents, to $7.83.

Meanwhile, indexes on Wall Street ended the week relatively flat after showing gains at the open. U.S. markets were closed on Christmas Day, but traded at new highs on Thursday, which was Boxing Day in Canada.

On Friday, the Dow Jones industrials dropped 1.47 points to 16,478.41, while the S&P 500 index declined 0.61 of a point to 1,841.41. The Nasdaq took back 10.59 points to 4,156.59.

The Dow and the S&P hit record highs this week as investors were encouraged by a sharp drop in unemployment benefits last week, another sign that the U.S. economy is faring better than expected.

The U.S. Labor Department reported Thursday that the number of people applying for unemployment benefits dropped by 42,000 last week to a seasonally adjusted 338,000, the biggest drop since November 2012.

But economists noted that the figures from late November and December may be warped by seasonal volatility around the Thanksgiving, Christmas and New Year’s holidays. The Labor Department reported that the less-volatile four-week average rose 4,250 to 348,000.

Although Friday was a regular trading day in Toronto and in the U.S., no major economic news or corporate earnings were scheduled in either country.

There are only two trading days left in 2013 and it’s expected the trend of low-volume holiday trading will continue, with many investors still on vacation.

“This time of year, historically, we usually see a melt up, or a Santa Claus rally, as they tend to call it. I wouldn’t be surprised to see the market continue to move up higher as we approach the new year,” said Allan Small, a senior investment adviser of the Allan Small Financial Group with HollisWealth.

“Once everybody comes back in the new year, it could be a different story.”

Most sectors on the TSX were positive, with base metals leading the charge by climbing 2.36 per cent. Shares in HudBay Minerals (TSX:HBM) rose 1.64 per cent, or 14 cents, to $8.67.

The gold sector followed with an uptick of 1.63 per cent, as gold prices advanced 1.70 to US$1,214 an ounce.

“Day-to-day, it’s tough to say what could trigger a rally in gold,” said Small. “The momentum for the downside overall could be inflationary pressure. If there is some inflation, gold will rise with it. (But) with a strong U.S. economy, I see no reason to own gold.”

The energy sector gained 0.64 per cent, with the February crude rising 77 cents to US$100.32 a barrel, while the metals and mining sector added 1.22 per cent, as March copper fell a penny to US$3.39 a pound.

Overnight Thursday night, optimism from the latest unemployment figures from the U.S. helped drive markets in China and elsewhere higher. More employment could mean more U.S. orders to support exports from those countries.

The rally follows the U.S. Federal Reserve’s decision last week to start reducing its monetary stimulus by $10 billion, to $75 billion a month, starting in January.

Many had feared the decision to rein in its policy of quantitative easing, or QE, would be negative for stocks as the stimulus has shored up markets over the past few years.