Linda Nguyen, The Canadian Press
A man walks past a building in Toronto that used to house the Toronto Stock Exchange on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim
TORONTO - The Toronto stock market was higher Monday afternoon as the latest American manufacturing data pointed to continued recovery in the U.S. economy while Thanksgiving holiday sales disappointed.
The S&P/TSX composite index was ahead 48.25 points to 13,443.65. Meanwhile, the Canadian dollar fell to its lowest intraday price since October 2011 as the loonie lost 0.20 of a cent to 93.96 cents U.S.
Markets on Wall Street were mixed, with the Dow Jones industrials pulling back 21.29 points to 16,065.12 and the Nasdaq dipping 4.59 points to 4,055.30. The S&P 500 index edged up 2.11 points to 1,807.76.
The Institute for Supply Management says its index of manufacturing activity rose in November to 57.3 as factories increased production and hiring amid a large number of new orders. That figure is up from 56.4 in October and the highest since April 2011. A reading above 50 indicates growth.
Jennifer Dowty, an associate portfolio manager with CIBC Global Asset Management, said the latest reading confirms "continued evidence" that the U.S. economy is steadily recovering.
Meanwhile, economic news from China overnight was also positive, with the HSBC purchasing managers' index for November coming in at 50.8. Although the reading was down slightly from 50.9 in October, it was still the second-highest level in eight months and an improvement from a preliminary reading of 50.4 released earlier last month. Typically, numbers above 50 indicate an expansion.
Investors in the U.S. are returning from a lacklustre Friday session, which was shortened due to the Thanksgiving holiday.
A survey released Sunday of 4,500 shoppers conducted for the National Retail Federation found that total spending in stores and online over the four-day long weekend was expected to fall for the first time ever since it began tracking it in 2006. The trade group says spending is expected to dip an estimated 2.9 per cent to $57.4 billion.
Dowty said U.S. investors are wary of making major moves until the latest payrolls data is released on Friday, which may provide more hints on whether the Federal Reserve will decide to cut back its US$85 billion of monthly bond purchases at its next meeting on Dec. 18. The Fed's stimulus has kept interest rates low and helped drive equities markets higher this year.
The consensus is that the U.S. central bank will not begin to taper until the new year. But positive payroll figures, new home sales and the final revision to third quarter GDP, may have the potential to change the Fed's mind.
In corporate news, Talisman Energy Inc. (TSX:TLM) says two representatives of activist investor Carl Icahn will join its board.
One of Icahn's representatives will sit on the board committee searching for a successor to Hal Kvisle, who plans to step down as Talisman's president and chief executive next year. Icahn revealed through regulatory documents in October that he had acquired about six per cent of Talisman's stock, and has now increased his holdings to about seven per cent.
Last month, Talisman announced it would sell 75 per cent of its assets in northeastern B.C.'s Montney formation to Progress Energy Canada Ltd., a subsidiary of Malaysia's Petronas, for $1.5 billion. Shares rose 4.18 per cent or 52 cents to $12.95.
The Toronto Stock Exchange saw gold, materials and metals and mining all decline. The gold sector was the leading decliner, dropping 3.85 per cent as February bullion fell $28 to US$1,222.40 a barrel.
Shares in the one of the world's largest gold companies, Barrick Gold (TSX:ABX), fell nearly five per cent, or 79 cents to $16.82 following reports that founder Peter Munk plans to step aside as co-chairman. The company refused to comment Monday, except to say it will provide an update later this week.
Dowty said gold prices will likely continue to feel pressured.
"The U.S. economy is steadily recovering and gold, being a safe haven, is not a place that investors need to be right now," she said.
Other commodities were mixed as the January crude contract on the New York Mercantile Exchange climbed $1.22 to US$93.94 a barrel as the sector saw an uptick of one per cent. The metals and mining sector on the TSX fell 1.84 per cent as December copper dropped three cents to US$3.18 a pound.
It's going to be a heavy earnings week as the country's major banks report fourth-quarter and full-year results.
And the Bank of Canada will announce Wednesday whether its trend-setting rate remains at one per cent, where it’s been since late 2010.