TSX up: German data boosts confidence, gold miners jump on rising bullion prices

TORONTO – The Toronto stock market registered a solid advance Tuesday afternoon as German economic data suggested Europe’s biggest economy is stabilizing.

The S&P/TSX composite index jumped 90.47 points to 14,972.97, led by a large gain in the gold sector amid rising bullion prices. The Canadian dollar was up 0.03 of a cent to 88.5 cents US.

U.S. markets also made headway as the Dow Jones industrials rose 40.07 points to 17,687.82 and the S&P 500 index climbed 10.48 points to 2,051.8 — both closing at fresh record highs. The Nasdaq ran up 31.44 points to 4,702.44.

Germany’s ZEW institute investors’ confidence index rose by 15.1 points in November, bringing it back into positive territory with a reading of 11.5. That is still far below its long-term average of 24.4 points and ZEW head Clemens Fuerst warned that “the economic environment remains fragile, not least due to ongoing geopolitical tensions.”

The data was a relief to markets since a string of downbeat economic reports suggesting Germany could drop back into recession helped spark the October sell-off on stock markets.

New York markets have recovered all the lost ground and reached new highs in the last few weeks, while the TSX has clawed back a good chunk of the losses that sent it into correction territory.

“There were good reasons for the market to sell off, but what has basically saved the markets and brought them back was the corporate earnings season, which has been very strong,” said Gareth Watson, vice-president investment management and research at Richardson GMP Ltd.

“Earnings growth has been just below double digits in this quarter, but you’ve also had the sales growth and that’s one area where we have had some concerns over a number of quarters. A this stage, I think investors take a look at the underlying earnings and fundamentals of these companies and say, it’s still where we would like to have our money at the moment.”

The gold sector was the biggest percentage advancer, ahead about 5.2 per cent as a weaker American dollar helped push the December bullion contract up $13.60 to US$1,197.10 an ounce.

The base metals sector shed 0.21 per cent as the December copper contract fell four cents to US$3 a pound.

The energy sector slipped 0.3 per cent as oil prices continued to hover around the US$75 a barrel mark with the December contract down $1.03 at US$74.61.

On the earnings front, Sears Canada (TSX:SCC) posted a quarterly loss of $118.7 million or $1.16 per share, more than double the retailer’s 2013 third-quarter loss. Sears Canada said its quarterly revenue dropped to $834.5 million from $982.3 million and its shares fell 24 cents to $10.75.

George Weston Ltd. (TSX:WN) earned a profit from continuing operations attributable to shareholders of $53 million or 30 cents per share, compared with $168 million or $1.21 per share a year ago. Results were hit by costs related to the acquisition of Shoppers Drug Mart by Weston subsidiary Loblaw Cos. (TSX:L) last year. George Weston shares inched up a dime to $94.60.

Meanwhile, the Democrat-controlled Senate on Tuesday night narrowly defeated a bill that would have approved TransCanada’s (TSX:TRP) proposed Keystone XL oil pipeline from Canada to the U.S. The bill, which needed 60 votes to pass, fell just one vote short at 59-41 after the Republican-controlled House had approved it overwhelmingly last week.

President Barack Obama did not support the bill and the White House did not say whether he planned a veto if it had been approved. However, the Republicans have vowed to push the bill through next year, when their party will have control of both the Senate and the House.

TransCanada shares closed down 57 cents at $56 on the TSX on Tuesday.