TORONTO - The Toronto stock market closed slightly higher Monday as telecom stocks recovered a chunk of recent losses, but the market still felt the weight of mining stocks ahead of a slate of earnings reports.
The S&P/TSX composite index gained 21.14 points to 12,669.04.
The market also found some support after Hudson's Bay Co. (TSX:HBC), Canada's oldest retailer, announced that it was buying U.S. luxury retailer Saks Inc. for US$2.9 billion, paying US$16 per Saks share plus assumed debt.
HBC plans to keep Saks as a separate unit headquartered in New York and open seven Saks department stores in Canada. HBC’s other holdings include The Bay and Lord & Taylor in the U.S. Investors liked the deal, sending HBC stock up 96 cents or 5.82 per cent to $17.45.
"You look at this story where Hudson’s Bay is trying to figure out ways to expand growth and one of the areas we’re seeing growth is within the consumer aside south of the border," said Craig Fehr, a Canadian markets specialist at Edward Jones in St. Louis, Mo. "We’re seeing them capitalize on that."
The Canadian dollar edged 0.13 of a cent higher to 97.47 cents US while traders wait for the latest reading on Canadian economic health. Economists expect Statistics Canada to report Wednesday that gross domestic product grew by 0.3 per cent during May.
Meanwhile, U.S. indexes were lower as traders awaited a heavy slate of economic data this week. The Dow Jones industrials fell 36.86 points to 15,521.97, the Nasdaq lost 14.02 points to 3,599.14 and the S&P 500 index was 6.32 points lower at 1,685.33.
On Monday, the National Association of Realtors said the number of Americans who signed contracts to buy homes dipped in June from a six-year high in May. It said its seasonally-adjusted index for pending home sales ticked down 0.4 per cent to 110.9 in June. The May reading was revised lower by a percentage point to 111.3, but it was still the highest since December 2006.
Other reports out this week include second quarter U.S. GDP data being released Wednesday, the non-farm payrolls report for July on Friday and a scheduled announcement on interest rates Wednesday by the U.S. Federal Reserve.
Markets are particularly interested in any indication from the Fed on tapering its monthly bond purchases, which have kept long term rates low and fuelled a rally on equity markets.
Expectations for the U.S. growth data are muted, largely due to the effects of the sequestration, a series of across the board U.S. government spending cuts worth US$85 billion that took effect March 1.
On Friday, the U.S. Labor Department is expected to report the economy cranked out about 190,000 jobs during July.
Canadian labour data for July won't released until August 9.
The telecom sector led TSX gainers, up 0.9 per cent with Rogers Communications (TSX:RCI.B) up 56 cents to $41.92 and Telus rose 55 cents to $31.95.
The sector lost ground last week as investors mull the effects of a possible entry into the sector by U.S. telco Verizon Communications.
Bell (TSX:BCE), Telus (TSX:T) and Rogers are calling for Ottawa to change its policy on foreign ownership of small Canadian wireless companies. The three Canadian rivals say they have been put at an unfair disadvantage that allows foreign carriers like Verizon to buy small Canadian wireless carriers while denying them the same opportunity.
Commodity prices were mixed and the metals and mining component was the lead decliner, down three per cent as September copper closed unchanged at US$3.11 a pound. Teck Resources (TSX:TCK.B) fell 41 cents to C$24.70.
Turquoise Hill Resources (TSX:TRQ) fell $1.07 or 19.63 per cent to $4.38 after hitting a new 52-week low of $4.37 as it said it's expecting a delay in developing its Oyu Tolgoi copper project in Mongolia due to the government’s financing process. Turquoise Hill’s primary operation is its 66 per cent interest in the Oyu Tolgoi copper-gold-silver mine.
The base metals sector has had a positive month, up about three per cent during July as investors bought into a sector badly beaten down amid weak commodities and a slow global economic rebound. The component is still down about 28 per cent year to date and investors have been selling off miners over the last couple of sessions ahead of a slew of earnings reports coming down from the resource sector.
Expectations are low since these companies have suffered from low prices for oil and metals.
"I think the earnings are unlikely to be a saving grace here," added Fehr.
"They’re dealing with subdued prices. They’re dealing with subdued global demand for resources and that is a pretty tough combination to operate in."
Miners reporting this week include Lundin Mining (TSX:LUN) and uranium miner Cameco (TSX:CCO).
It's a very heavy week for energy company earnings with Canadian Oil Sands (TSX:COS), Talisman Energy (TSX:TLM), Suncor Energy (TSX:SU) and Imperial Oil (TSX:IMO) posting results.
The September crude contract on the New York Mercantile Exchange dipped 15 cents to US$104.55 a barrel and the energy sector drifted 0.51 per cent lower. Tourmaline Oil (TSX:TOU) dropped $1.72 to $38.36.
The gold sector was off about 0.75 per cent while August bullion rose $6.90 to US$1,328.40 an ounce. Barrick Gold Corp. (TSX:ABX) faded 19 cents to C$18.09.