TORONTO – The Toronto stock market closed slightly lower Thursday despite strong earnings reports from TD Bank (TSX:TD), CIBC (TSX:CM) and National Bank (TSX:NA).
The S&P/TSX composite index drifted 6.16 points lower to 12,151.13.
The market did get some lift from grocer Loblaw Companies Ltd. (TSX:L). Its stock soared 13.69 per cent to $38.20 on very heavy volume of 10.3 million shares after the company said it wants to unlock shareholder value by creating one of the largest real estate investment trusts in Canada.
Units of the REIT are expected to be sold in an initial public offering to be completed in mid-2013, subject to regulatory approvals. Shares in Loblaw majority owner George Weston (TSX:WN) ran up 6.78 per cent to $67.71.
The financials sector was the biggest decliner as TD Bank’s (TSX:TD) quarterly profit amounted to $1.66 per share before adjustments, down two cents per share from the same time last year. On an adjusted basis, TD had $1.83 per share of diluted earnings, up from $1.75 per share a year earlier and two cents a share above a consensus estimate. Its shares dropped $1.46 to $81.12 as revenue totalled $5.89 billion, slightly less than the $6 billion that analysts expected.
TD also announced it is buying the U.S.-based Epoch investment management business for US$668 million in cash.
CIBC (TSX:CM) shares dipped 38 cents to $80.14 as the bank had $852 million or $2.02 per share of net income in the fourth quarter, an increase of nearly $100 million from the same time last year. On an adjusted basis, CIBC’s fourth-quarter profit amounted to $2.04 per share, six cents above estimates. Revenue totalled $3.16 billion, slightly missed analyst forecasts of $3.2 billion.
And National Bank’s (TSX:NA) quarterly earnings ran ahead 20 per cent from a year ago to $351 million or $1.97 per share. Ex-items, the bank earned $1.93 a share, which matched expectations.
National is also upping its dividend by five per cent to 83 cents a share but its shares gave back $1.11 to $76.66.
The TSX Venture Exchange gained 2.16 points to 1,186.7.
The Canadian dollar was up 0.06 of a cent at 100.9 cents US.
U.S. indexes were modestly positive as traders hoped that lawmakers are getting closer to an agreement that would avert a fiscal crisis at the end of the year.
The Dow Jones industrials rose 39.55 points to 13,074.04, the Nasdaq was up 15.57 points to 2,989.27 while the S&P 500 index was up 4.66 points to 1,413.94.
Traders were encouraged by reports that a substantial number of Republicans had signed a letter calling for exploration of “all options” on taxes and entitlement programs, a signal that some rank-and-file members could be ready to bargain.
President Barack Obama and House of Representatives Speaker John Boehner spoke Wednesday for the first time in days in a telephone discussion on the so-called “fiscal cliff.” That’s the name for the automatic spending cuts and tax increases that would kick in at the start of next year if no budget deal is reached.
Economists think the subsequent sharp drop in economic activity would send the U.S. back into recession.
Obama said a compromise was “not that tough” and could even be done quickly, raising the possibility that broader negotiations might soon resume between the White House and congressional leaders.
But Treasury Secretary Tim Geithner warned Wednesday after markets closed that the administration would “absolutely” let the double whammy take effect as scheduled unless Republicans give in to Obama’s demand to raise tax rates at upper income levels.
The industrials sector was up about one per cent amid a major deal by transport giant Bombardier Inc.’s (TSX:BBD.B) Aerospace division. American carrier Delta Air Lines has placed a firm order for 40 of its CRJ900 NextGen regional jets. Delta has also taken options on an additional 30 planes.
Montreal-based Bombardier said that, based on the list price, the firm order is valued at approximately US$1.85 billion and could reach approximately $3.29 billion if the 30 options are exercised. Its shares gained five cents to $3.33.
The consumer discretionary sector was up 0.42 per cent as Dollarama Inc. (TSX:DOL) posted quarterly net profits of $51.5 million or 68 cents per diluted share, up from $41.8 million or 55 cents a year earlier. Revenues soared to just under $458 million from $400.3 million but its shares dipped $1.51 to $61.09.
And Rona Inc. (TSX:RON) shares gained 30 cents to $10.45 as it said it is planning to sell non-core assets to focus the business and improve profitability. Rona is Canada’s largest home-improvement retailer.
The gold sector was up about 0.4 per cent as February gold moved $8 higher to US$1,701.80 an ounce. Kinross Gold (TSX:K) gained 11 cents to C$9.55.
Other commodities were lower as the March copper contract on the New York Mercantile Exchange shed four cents to US$3.64 a pound after rising three cents Wednesday amid rising hopes for more economic stimulus in China, the world’s biggest consumer of the metal. The base metals sector was off 0.14 per cent and Teck Resources (TSX:TCK.B) lost 83 cents to C$35.03.
The energy component was off 0.47 per cent as the January crude contract extended losses from Wednesday that resulted from data showing a sharp run-up in U.S. gasoline inventories last week. Crude lost $1.62 to US$86.26 a barrel.
Suncor Energy Inc. (TSX:SU) says unplanned maintenance work at its oilsands plant led to lower than expected production in November. Full-year production is expected to fall in the low end of its target range of 325,000 to 340,000 barrels per day. Its shares declined 20 cents to C$32.48.
In other corporate news, Lululemon Athletica Inc. (TSX:LLL) earned $57.3 million or 39 cents a share in its latest quarter, up from $38.8 million a year ago. Revenue grew by 37 per cent to $316.5 million. Its shares were $4.85 higher at $72.89.