TMX Group Inc. signage is displayed on a screen in the broadcast center of the Toronto Stock Exchange (TSX) in Toronto, Ontario, Canada, on Monday, Oct. 31, 2011. A takeover of Toronto Stock Exchange owner TMX Group Inc. by a group of Canadian banks and pension funds is "significantly" more likely to succeed after TMX's board endorsed the C$3.73 billion ($3.73 billion) offer, analysts said. Photographer: Norm Betts/BloombergNorm Betts/Bloomberg
The Toronto stock market was slightly lower Wednesday amid strong U.S. retail sales and ahead of more information that may provide hints about when the Federal Reserve will start to wind up its monetary stimulus.
The S&P/TSX composite index was down 9.62 points to 13,433.15, held back by further declines in the gold sector, while the Canadian dollar gained 0.18 of a cent to 95.68 cents US.
U.S. indexes were little changed despite the better than expected report on October retail sales. The Dow industrials slipped 5.39 points to 15,961.64, the Nasdaq gained 9.47 points to 3,941.02 while the S&P 500 index was up 1.79 points 1,789.66.
The U.S. Commerce Department says retail sales rose 0.4 per cent in October, impacted by a steep drop in gas prices. Excluding sales at gas stations, retail spending increased an even stronger 0.5 per cent.
The consensus had called for October U.S. retail sales to have risen by 0.1 per cent following a flat showing in September.
"Not bad for a month that saw the government closed for half of it, and consumer confidence taking a hit but the strong jump in employment helped, along with cheaper gas prices to fill up one's vehicle," observed BMO Capital Markets senior economist Jennifer Lee.
Traders will also consider existing U.S. home sales data for October later in the morning. Economists think sales will come in at an annualized rate of 5.16 million, down from 5.29 million because of higher mortgage rates and the U.S. government's fiscal impasse.
The Fed releases its minutes from its latest meeting late last month at mid-afternoon.
It will be parsed for new insights into the central bank's thinking on the economy and the longevity of its low interest rate policies.
The central bank's monthly purchase of US$85 billion of bonds have kept long term rates low and pushed investors into riskier but potentially higher yielding assets such as stocks. The quantitative easing has underpinned substantial gains on many markets this year but left investors on edge for signs the central bank will start reducing its asset purchases.
Janet Yellen, who is slated to become the next Fed chairman, has already expressed strong support for low interest rate and bond buying policies aimed at stimulating U.S. growth.
The energy sector led gainers, edging up 0.36 per cent while December crude gained 37 cents to US$93.31 amid expectations that last week's U.S. crude stockpiles fell for the first time in nearly two months in a possible sign of improving demand.
Stockpile figures for last week are expected to show declines of 500,000 barrels in crude oil stocks and 150,000 barrels in gasoline stocks.
If confirmed, the fall in crude oil supplies would be the first in nearly two months and indicate a pick-up in demand. Canadian Natural Resources gained 25 cents to C$34.09.
The tech sector was positive with CGI Group (TSX:GIB.A) ahead 49 cents to $39.88.
Mining stocks were ahead 0.2 per cent with December copper up one cent at US$3.17 a pound.
The gold sector lost 1.15 per cent while December bullion declined $12.30 to US$1,261.20 an ounce. Goldcorp (TSX:G) faded 36 cents to $24.95.
It was a quiet day for Canadian corporate earnings but in the U.S., farm and construction equipment maker Deere & Co. said fourth-quarter net income rose 17 per cent as it raised prices for its farm and construction equipment. But it predicted a slowdown in the farm economy and smaller profits for next year.
Deere earned $806.8 million, or $2.11 per share, well ahead of the $1.90 per share profit expected by analysts and its shares were up $1.98 to $84.79.
Revenue fell 5.1 per cent to $2.78 billion. Ex-items, the loss was $1.81 per share against the $1.74 loss analysts expected but the results showed its business is starting to stabilize heading into the critical holiday shopping season and its shares bounded ahead 68 cents or 7.8 per cent to $9.39.
Home improvement company Lowe's Cos. earned $499 million, or 47 cents per share, up from $396 million, or 35 cents per share, a year ago. Analysts polled by FactSet expected earnings of 48 cents per share.
Revenue rose seven per cent to $12.96 billion, exceeding expectations of $12.73 billion but its shares lost $1.78 to $48.66.
European bourses were mainly lower with London's FTSE 100 index down 0.14 per cent, the Paris CAC 40 fell 0.3 per cent and Frankfurt's DAX was flat.