Toronto stock market closes higher on solid Chinese growth data, RIM upgrade

TORONTO – The Toronto stock market closed higher Friday on further indications that China continues to recover from a recent economic slump and an analyst upgrade for BlackBerry maker Research In Motion Ltd.

The S&P/TSX composite index gained 50.96 points to 12,725.69, its best level in about 11 months, while the TSX Venture Exchange was 2.17 points higher to 1,235.32.

The Canadian dollar was down 0.62 of a cent to 100.83 cents US even as Statistics Canada said manufacturing sales increased 1.7 per cent in November to $49.9 billion, the highest level since May 2012. It was also higher than the 1.1 per cent gain that economists expected.

Traders looked to the Bank of Canada’s next interest rate announcement on Wednesday. The loonie also fell alongside other cyclical currencies such as the Australian dollar and the Norwegian kroner.

U.S. indexes were lacklustre amid solid earnings reports from General Electric and investment bank Morgan Stanley along with a disappointing read on consumer sentiment.

The Dow Jones industrials gained 53.68 points to close at a five-year high of 13,649.7 as the University of Michigan’s consumer survey index slipped to 71.3 in January from 72.9 in December.

“Although the fiscal cliff was scaled back, consumers appear wary as to the impact of higher taxes on their disposable incomes,” said CIBC World Markets economist Andrew Grantham.

“(And) although the decline in sentiment during December had no discernable impact on spending, given the strong retail sales figures, lower confidence could begin to impact spending as 2013 continues,” Grantham added.

A disappointing earnings report from chip giant Intel helped push the Nasdaq down 1.3 points to 3,134.71, while the S&P 500 index also ended the session at a five-year high, up 5.04 points to 1,485.98.

Research In Motion Ltd. (TSX:RIM) shares were up 7.02 per cent to $15.71 after Jefferies & Co. upgraded the stock to buy from hold and raised its price target to US$19.50 from $13. The move came on expectations RIM will open its corporate BlackBerry email services to iPhone and Android devices.

Even before the upgrade, RIM stock had already surged more than 25 per cent over the past week on rising optimism ahead of the unveiling of its new BB10 product on Jan. 30.

Traders were relieved at data showing that growth in China rose to 7.9 per cent in the three months ended in December, up from the previous quarter’s 7.4 per cent.

For the year, the world’s second-largest economy grew by 7.8 per cent, which was China’s weakest annual performance since the 1990s.

The slowdown was due largely to government controls imposed to cool a real estate boom and surging inflation fuelled by Beijing’s massive stimulus in response to the 2008 crisis. But it worsened as demand for Chinese exports dropped unexpectedly, raising the risk of job losses and unrest.

However, analysts say China could suffer a setback if exports weaken or the government fails to maintain investment spending that is propping up a recovery.

The Chinese data helped push the TSX up 124 points or 0.98 per cent this past week while the Dow industrials rose 161.27 points or 1.19 per cent.

All sectors closed higher on the TSX save for a drop in the consumer staples component.

Telecoms advanced Friday with Rogers Communications (TSX:RCI.B) ahead 79 cents to $46.23.

The financials sector was also ahead, up 0.59 per cent as CIBC (TSX:CM) climbed 69 cents to $83 while Manulife Financial (TSX:MFC) ran up 18 cents to $14.30.

Copper prices moved higher in the wake of the Chinese data. China is the world’s biggest consumer of the metal, which is viewed as an economic barometer as it is used in so many applications.

The March contract on the New York Mercantile Exchange closed up two cents at US$3.68 a pound and the base metals component on the TSX advanced 0.46 per cent. First Quantum Minerals (TSX:FM) gained 21 cents to C$21.25 and Turquoise Hill Resources (TSX:TRQ) was 27 cents higher at $8.71.

The gold sector rose about 0.4 per cent with February bullion down $3.80 to US$1,687 an ounce. Kinross Gold (TSX:K) added eight cents to C$9.45 while Iamgold (TSX:IMG) improved by 15 cents to $10.88.

Oil prices were little changed after jumping about $2 over the past two sessions after inventory data showed a sharp decrease in stocks last week. Prices also found support this week after Islamic militants seized an Algerian natural gas facility.

The energy sector was ahead 0.45 per cent while the February crude contract on the Nymex added seven cents to US$95.56 a barrel. Canadian Natural Resources (TSX:CNQ) climbed 62 cents to C$29.95 and Imperial Oil (TSX:IMO) ran up 19 cents to $43.61.

On the earnings front, General Electric Co. reported net income of US$4 billion on revenue of $39.3 billion for the quarter. The company’s operating profit per share was 44 cents, a penny higher than analysts expected. GE’s revenue also beat analysts’ expectations of $38.8 billion and its shares jumped 3.47 per cent to $22.04.

Shares in investment bank Morgan Stanley jumped 7.86 per cent to $22.38 as it said it earned US$867 million or 28 cents a share in the last quarter after stripping out an accounting charge. That beat expectations by a penny. Morgan Stanley revenue jumped 37 per cent to $7.5 billion, beating expectations of $7.2 billion.

After the close Thursday, chip giant Intel Corp. posted quarterly net income of $2.47 billion, or 48 cents per share, beating expectations by three cents. Revenue fell three per cent to $13.5 billion, matching analyst expectations. On a call with analysts, Intel chief financial officer Stacy Smith admitted that tablets are affecting sales of PC chips, which fell three per cent in the quarter. Intel shares lost 6.3 per cent to $21.25.