Toronto stock market rises following slump on emerging market concerns

TORONTO – The Toronto stock market closed higher Tuesday after a string of sharp losses prompted by emerging market worries.

The S&P/TSX composite index ran ahead 105.37 points to 13,687.66. with gains spread across all sectors, after tumbling 400 points over the previous three sessions.

The Canadian dollar closed at a fresh 4 1/2 year low, down 0.35 of a cent at 89.64 cents US.

U.S. indexes were higher as traders shrugged off a surprisingly weak durable goods orders report for December and concentrated on other data showing U.S. consumer confidence has reached its highest point since August on the strength of a brighter view of the job market and business conditions.

The Dow Jones industrials was up 90.68 points to 15,928.56, the Nasdaq composite index moved up 14.35 points to 4,097.96 and the S&P 500 index rose 10.94 points to 1,792.5.

Markets have been severely buffeted over the last few sessions on concerns about emerging markets, including slowing growth in China, the world’s second-biggest economy.

Investors have also been jittery because of currency turmoil involving the Turkish lira, the Russian ruble and the Indian rupee as investors wonder how the U.S. Federal Reserve’s policy to reduce its monetary stimulus impacts on them.

“What’s fearful is that currency instability often leads to economic and stock instability,” observed John Stephenson, portfolio manager at First Asset Funds.

Investors felt reassured after the People’s Bank of China on Tuesday injected more money into the country’s financial markets to ease strained credit conditions.

India’s central bank unexpectedly raised interest rates to prop up its ailing currency, while Turkey also boosted its rate — to 12 per cent from 7.75 per cent — at an emergency policy meeting called by its central bank after the lira hit a series of all-time lows.

The Fed’s massive bond purchases over the last few years has resulted in a stream of cheap money into those markets. But now the central bank is cutting back on those asset purchases.

The Fed is widely expected to further pare its bond purchases by another US$10 billion a month to $65 billion on Wednesday.

At the same time, analysts have suggested that North American stock markets are vulnerable to a correction after Fed monetary easing helped underpin a strong rally on many equity markets last year that left the S&P 500 up about 30 per cent for 2013. That index is now down about 3.5 per cent year to date.

“We’ve had a correction. I don’t see us going down 10 per cent, and three, four per cent, that’s a pretty healthy correction and it’s time to start looking to buy,” Stephenson said.

All TSX sectors were higher with gains paced by a 2.89 per cent rise in the base metals sector even as March copper on the Nymex was off a penny at US$3.25 a pound. Teck Resources (TSX:TCK.B) was ahead 85 cents to C$27.73 while Thompson Creek Metals (TSX:TCM) gained 18 cents to $3.03.

The tech sector rose 2.39 per cent with BlackBerry (TSX:BB) ahead 34 cents to $11.18 as the company said that it’s making several changes to its BlackBerry 10 smartphone operating system, including a revised incoming call screen.

February bullion declined $12.60 to US$1,250.80 an ounce, but the gold sector moved up about 2.29 per cent. Goldcorp (TSX:G) ran up 69 cents to C$26.62 while Franco Nevada (TSX:FNV) rose $1.72 to $52.03.

The March crude contract on the New York Mercantile Exchange was up $1.69 to US$97.41 a barrel. The energy sector rose 1.05 per cent and Canadian Natural Resources (TSX:CNQ) advanced 93 cents to C$36.30.

Financials also lifted the TSX as Sun Life Financial (TSX:SLF) moved up 62 cents to $36.87.

Bank of Montreal (TSX:BMO) is offering to buy U.K.-based investment manager F&C Asset Management PLC in a cash deal valued at $1.3 billion. BMO shares inched up eight cents to $70.54.

A major loser was Air Canada (TSX:AC.B). Its shares tumbled $1.07 or 12.3 per cent on heavy volume of 12.4 million shares after a Merrill Lynch analyst cut price and profit targets for that carrier and WestJet. Glenn Engel said they will face severe headwinds from a sharply lower Canadian dollar, which has already dropped over four cents this month. He said the pressure will come in the form of higher prices for fuel and new aircraft. WestJet fell $1.06 or 4.09 per cent to $24.83.

In earnings news, grocer Metro (TSX:MRU) says its net earnings fell 15 per cent to $99.2 million in the latest quarter on a slight dip in sales. Same-store sales decreased 0.5 per cent in the quarter. Adjusted profits were $1.11 a share, four cents lower than forecast. Metro is also increasing its quarterly dividend by 20 per cent to 30 cents and its shares were up $2.76 to $65.25.

Automaker Ford said net income ex-items was 31 cents per share, topping analysts’ forecast of 27 cents but its shares shed most early gains to edge up just one cent to US$15.72.

Apple shares were down 7.99 per cent to US$506.50 even as the company reported its best quarter but it also delivered a revenue forecast that fell below analysts’ predictions for the current quarter.