TSX up amid strong US jobs data; traders find few clues on speed of Fed tapering

TORONTO – The Toronto stock market closed slightly higher Wednesday as minutes from the latest Federal Reserve meeting shed little light on how fast the U.S. central bank will accelerate the winding up of a key stimulus program.

The S&P/TSX composite index gained 17.7 points to 13,614.63 with lift coming primarily from miners and techs.

The Canadian dollar continued to plumb multi-year depths, down 0.27 of a cent to 92.56 cents US, its lowest close since late October 2009.

New York markets were mainly lower following the release of the minutes from the meeting last month when the Fed decided to start tapering its US$85 billion a month of bond purchases by $10 billion starting this month and said further decreases would depend on economic data.

But traders had hoped there would be some clues as to the pace of further tapering and now the focus has shifted to Friday and the release of the government’s employment report for December.

Expectations for a stronger than expected jobs report on Friday grew after payroll firm ADP reported Wednesday that the U.S. private sector created 238,000 jobs in December.

The ADP data came out two days before the U.S. government releases its non-farm payrolls report and expectations have been that the U.S. economy cranked out about 195,000 jobs in December.

The Dow Jones industrials lost 68.2 points to 16,462.74, the Nasdaq added 12.43 points to 4,165.61 and the S&P 500 index declined 0.39 of a point to 1,837.49.

Meanwhile, the Fed minutes did nothing to dispel concerns that the U.S. central bank will exit its latest quantitative easing program well before the end of 2014.

“(Tapering) is going to be data dependent but I think there’s a school of thought now that we will start to see that tapering of $10 billion, maybe $15 billion a month,” said Garey Aitken, chief investment officer at Franklin Bissett Investment Management.

“So they’re not just going to go from $85 (billion) to $75 (billion) and leave it there — this is going to be a methodical wind-down of this so that by the third quarter we have completely stopped (the asset purchases).”

The bond purchases have kept long-term rates low and encouraged investors to put their money in the stock market.

TSX gains were paced by the base metals segment, up 0.74 per cent even as the March copper contract lost early gains and gave back two cents to US$3.34 a pound. Performance was mixed with HudBay Minerals (TSX:HBM) ahead 20 cents to C$8.81 while Teck Resources (TCK.B) declined 33 cents to $26.28.

The tech sector was largely supportive, ahead 0.72 per cent as Open Text (TSX:OTC) rose $2.12 to $101.60.

BlackBerry (TSX:BB) was up six cents to $9.20 on top of two days of solid gains. Wednesday’s advance came as Fairfax Financial Holdings Ltd. (TSX:FFH) said that it will double its investment in the smartphone maker’s debt with the purchase of an additional US$250 million in convertible debentures.

Financials were also supportive with Manulife Financial ahead 50 cents to $21.35.

The gold sector was the biggest drag, down about one per cent as the February gold bullion contract slipped $4.10 to US$1,225.50 an ounce. Barrick Gold (TSX:ABX) faded 30 cents to C$19.37 while Goldcorp (TSX:G) fell 25 cents to $23.87. The component was the worst performer on the TSX last year, losing almost 50 per cent, but it has been generally positive so far this year, up almost four per cent over the last week.

Industrials also dragged, with Canadian National Railway (TSX:CNR) down 95 cents to $58.63. A CN train carrying liquefied petroleum gas and crude oil derailed in northwestern New Brunswick on Tuesday. A spokesman said initial indications are that 15 cars and one locomotive derailed from a train that consisted of 122 cars and four locomotives.

The energy sector was off 0.28 per cent as the February crude oil contract on the New York Mercantile Exchange slid $1.34 to US$92.33 a barrel. Imperial Oil (TSX:IMO) fell 61 cents to C$45.97.

In other corporate news, Monsanto reported better than expected first-quarter earnings on higher sales of the company’s insect-repelling and herbicide-resistant soybean seeds in Latin America. Despite an 8.6 per cent increase in profit, the company left its full-year fiscal guidance unchanged. Its shares shed early declines to advance $1.99 to US$115.23.