The screens at the TMX Broadcast Centre in Toronto show the closing numbers of the TSX on Tuesday, July 3, 2012.The Globe and Mail
The Toronto stock market was lower Wednesday as U.S. employment data raised concerns about the Federal Reserve cutting back on economic stimulus and traders took in positive earnings from National Bank (TSX:NA).
The S&P/TSX composite index lost 36.47 points to 13,283.4.
National Bank shares rose 63 cents to $91.53 after it posted $337 million in quarterly net income, adding up to a full-year profit of $1.554 billion. Ex-items, the bank had $370 million of adjusted net income, or $2.09 per share, up eight per cent from $1.93 per share a year earlier, which met expectations. National Bank is also upping its quarterly cash dividend by six per cent to 93 cents and also announced plans for a two-for-one stock split.
U.S. indexes were lower as the Dow Jones industrials down 47.52 points to 15,867.1, the Nasdaq was down 7.23 points to 4,029.97, while the S&P 500 index was off 6.15 points at 1,789.
There was positive news on the employment front two days before the release of the U.S. government's employment report.
Payroll firm ADP reported that the American private sector created 215,000 jobs during November. Economists have been forecasting that the government report would show that the economy cranked out a total of 183,000 jobs during the month.
While the data is another sign of an improving economy, analysts believe a report showing continuing, steady employment gains could persuade the Federal Reserve that it's time to start cutting back on its US$85 billion of monthly bond purchases.
The Fed's stimulus has supported a strong performance on global stock markets over the past few years. But tapering those asset purchases could work the opposite way, even though it would mean that the U.S. economy is improving.
Traders also digested a pair of strong trade reports.
Statistics Canada says the trade balance with the rest of the world moved to a $75 million surplus from a $303 million deficit in September.
In the U.S., the trade deficit fell in October, helped by America's energy boom that lifted exports to an all-time high. The trade gap narrowed to US$40.6 billion.
Financials also weighed on the TSX with all the big banks reporting this week. Bank of Montreal (TSX:BMO) shares fell 4.5 per cent Monday even as earnings beat expectations. Investors were disappointed with, among other things, weakness in its U.S. operations. BMO shares were down 22 cents to C$70.03 Wednesday while Royal Bank (TSX:RY) dropped 67 cents to $68.88.
The tech sector was also a major weight with CGI Group (TSX:GIB.A) down 81 cents to $37.71.
Elsewhere in the tech sector, Descartes Systems Group Inc. (TSX:DSG) had US$2.18 million of quarterly net income in its fiscal third quarter, a decline from a year ago due to costs associated with an acquisition. Revenue was US$38.7 million, up 19 per cent from a year earlier. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) per share was 18 cents, up from 16 cents a year earlier and a cent above estimates. Its shares advanced 35 cents to $14.56.
Metal prices improved following the U.S. jobs data with March copper ahead four cents to US$3.20 a pound. The base metals component dipped 0.15 per cent.
The energy sector dipped 0.09 per cent as oil prices also moved higher following the jobs data while oil ministers from the OPEC cartel gathered in Vienna.
The January crude contract on the New York Mercantile Exchange gained $1 to US$97.04 a barrel.
Iran indirectly challenged OPEC kingpin Saudi Arabia on Wednesday, announcing that it plans to pump as much oil as it can once sanctions on its crude exports are lifted, even if its extra output drives prices into the basement.
The gold group gained 1.15 per cent while February bullion rose $6.60 to US$1,227.40 an ounce. Goldcorp (TSX:G) climbed 33 cents to C$22.58.
In other corporate developments, Air Canada (TSX:AC.B) rose 11 cents to $7.84 after an analyst at BMO increased the price target for the carrier's shares to $10 from $7.50. Air Canada's share price has skyrocketed during this 2013 from a 52-week low of $1.59.
Earlier in Asia, Hong Kong's Hang Seng fell 0.8 per cent, South Korea's Kospi slid 1.1 per cent while China's Shanghai Composite added 1.3 per cent and Australia's S&P/ASX 200 gained 0.3 per cent.
European bourses were negative as London's FTSE declined 0.36 per cent, Frankfurt's DAX lost 0.41 per cent while the Paris CAC 40 declined 0.8 per cent.