TORONTO – The Toronto stock market broke a six-session losing run Thursday as traders used a selloff resulting from Sunday’s inconclusive Greek elections as an opportunity to pick up some beaten-down equities.
The S&P/TSX composite index ran ahead 61.16 points at 11,736.17 while the TSX Venture Exchange gained 9.62 points to 1,355.31.
However, nervousness hit the Canadian dollar, which closed down 0.08 of a cent to 99.83 cents US as traders continued to avoid riskier assets such as resource-based currencies, including the loonie, amid the latest round of eurozone turmoil.
New York’s Dow Jones industrials rose 19.98 points at 12,855.04.
The Nasdaq composite index slipped 1.07 points to 2,933.64, weighed down by a negative outlook from Cisco Systems. Cisco’s stock fell $1.97 or 10.49 per cent to US$16.81. The S&P 500 index was ahead 3.41 points at 1,357.99.
Positive jobs data helped support stocks Thursday. Weekly jobless claims in the U.S. edged downward last week, suggesting that employers may accelerate hiring this month. Applications dropped by 1,000 to a seasonally adjusted 367,000 in the week ended May 5, the U.S. Labour Department said Thursday.
The recent selloff on the TSX left the market about two per cent lower than where it started the year.
Besides the latest round of uncertainty in Europe, stocks and commodities have also been pressured by signs of slowing economies in China and the United States.
“It’s really based on commodities and demand from the emerging markets,” said Kevin Headland, director of the portfolio advisory group at Manulife Asset Management.
“They are growing but at a slower pace and I think the consensus was an expectation of continued strong markets and I think maybe that was a bit of a pipe dream.”
Meanwhile, analysts expect talks to form a Greek government will go nowhere and that Greeks will go back to the polls in June.
There are some hopes in the markets that in new elections Greeks who want the country to remain in the euro currency bloc will support the main pro-euro parties, facilitating the creation of a moderate coalition government.
“There is talk maybe the Greeks will have realized OK, this was my vote against austerity, now we’re going to look at one of the other parties,” Headland said.
“But again, how much does Greece matter? It’s more about what is going to happen with Spain and is there going to be some kind of knock on effect on their debt and perhaps Italy’s and that’s a bigger issue going forward.”
In the meantime, Greece is being held together by an international bailout. And analysts warn that Greece could run out of money as soon as next month without a government to negotiate the next level of its bailout.
On Thursday, China’s weak import growth data raised fears the world’s second-biggest economy wasn’t doing enough to stimulate domestic demand amid an economic slowdown.
Imports edged up 0.3 per cent to US$144.8 billion in April while exports rose 4.9 per cent to $163.3 billion, leaving a surplus of $18.4 billion, according to customs data released Thursday.
That compared with a surplus of $5.35 billion in March and a deficit of $31.5 billion in February.
China has been an important prop for a global economy still in the midst of a fragile recovery from the 2008 financial collapse and subsequent recession. Its huge appetite for energy and metals has boosted commodity prices and oil and mining stocks on the TSX.
But resource stocks and commodity prices have been hit particularly hard recently. The June crude contract on the New York Mercantile Exchange climbed 27 cents to US$97.08 a barrel, down sharply from US$106 at the beginning of this month. The energy sector improved by 0.75 per cent as Suncor Energy (TSX:SU) advanced 23 cents to C$29.30.
The base metals sector gained 0.32 per cent with copper prices up three cents at US$3.69. Demand concerns had pushed the metal down almost five per cent from May 1. HudBay Minerals (TSX:HBM) climbed 18 cents to C$9.45.
Bullion prices added $1.30 to US$1,595.50 an ounce, taking the gold sector up 0.55 per cent and Iamgold (TSX:IMG) gained 17 cents to C$10.97.
Financials were also positive as Sun Life Financial (TSX:SLF) shares gained 42 cents to $22.55 as it reported that an improvement in capital markets led to quarterly net income of $686 million or $1.15 per share compared with $438 million or 73 cents in the same period last year.
Stocks also benefited from news that Spain would take over Bankia SA, the country’s fourth-largest bank, which has high exposure to bad property loans. The government is hoping to convince investors that Spain won’t need a bailout.
Elsewhere in the sector, Royal Bank (TSX:RY) rose 58 cents to $53.95.
In other earnings news, Bombardier Inc. (TSX:BBD.B) was up 27 cents at $3.96 as it reported net income of $190 million in the first quarter, or 10 cents a share. That is down sharply from $220 million, or 12 cents a share a year ago. Revenue was $3.5 billion, compared with $4.7 billion last year.
Magna International Inc. (TSX:MG) posted first-quarter sales of $7.7 billion, up seven per cent from the first quarter of 2011. Canada’s largest auto parts maker handed in net income of $343 million. Magna shares gained 96 cents to $43.64.
Canadian Tire (TSX:CTC.A) posted $2.4 billion in revenue for the quarter ended March 31, up 23 per cent from the same period last year and a profit of $71 million, or 87 cents a share, up 21.5 per cent from the same period in 2011. Its shares gained $2.81 to $70.23.