Thursday April 24, 2014




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Earnings news, weak Chinese data depress TSX; indexes roiled on fake bomb tweet

TORONTO - The Toronto stock market closed little changed Tuesday after traders briefly made a snap reaction when hackers compromised the main Twitter account of The Associated Press news agency.

An erroneous tweet went out around 1 p.m. saying there had been two explosions at the White House and that President Barack Obama had been injured. The tweet sent the Dow industrials plunging about 150 points or about one per cent before it quickly bounced back once it became apparent the story was false.

The effect on the Toronto stock market was more muted, with the main index falling about 30 points before recovering somewhat to earlier levels.

The S&P/TSX composite index closed up 0.26 of a point at 12,090.94 amid data showing China's manufacturing sector barely in expansion mode in April.

The market was also pressured by earnings reports with traders expressing disappointment with Teck Resources (TSX:TCK.B) and Rogers Communications (TSX:RCI.B).

The Canadian dollar dipped 0.01 of a cent to 97.45 cents U.S.

Meanwhile, a strong earnings report from chemical company DuPont, helped by further evidence of a strengthening housing sector, sent U.S. indexes higher with the Dow industrials up 152.29 points to 14,719.46.

The Nasdaq rose 35.78 points to 3,269.33, while the S&P 500 index climbed 16.28 points to 1,578.78 as U.S. sales of new homes rebounded in March to the second-fastest pace in three years.

The U.S. Commerce Department said sales of new homes increased 1.5 per cent in March to a seasonally adjusted annual rate of 417,000. Sales have risen 18.5 per cent from a year ago. The median price of a new home was $247,000 in March, up three per cent from a year ago.

The DuPont Co. said its profits more than doubled in the first quarter on strong results by its agricultural unit. Operating earnings fell six per cent to $1.46 billion, or $1.56 per share, three cents better than forecast. Revenue matched expectations, increasing two per cent to $10.4 billion and its shares were $2.08 higher at US$52.49.

Elsewhere on the earnings front, Apple narrowly beat estimates, with earnings coming in at $10.09 a share, nine cents better than analyst forecasts.

Apple also beat on revenues, which were US$43.61 billion for the quarter, against the $42.31 billion that analysts expected, however several factors weighed down earnings, including slowing sales of the high-margin iPhone.

The company also said it would buy back $60 billion in shares, marking the largest buyback authorization in history, and raise its dividend by 15 per cent.

Apple's share price has slid more than 42 per cent from its peak in September but closed up 1.87 per cent at US$406.13 ahead of the earnings release. In after hours trading, the company's stock gained $1.05 to $407.18 as of 5:58 p.m. ET.

Prices for oil and copper declined as a preliminary survey by HSBC found that China's manufacturing growth slowed in April, in a further sign that growth in the world's second-largest economy is easing. HSBC's monthly purchasing managers' index fell to a worse-than-expected 50.5 from March's 51.6. Anything below 50 would have signalled a contraction in activity.

The Chinese data raised fresh worries about demand and May copper on the Nymex fell four cents to US$3.09. Goldman Sachs on Monday cut its three-, six- and 12-month copper forecasts following a heavy sell-off over the past two months.

The base metals sector finished well off the worst levels of the session.

A major exception was Teck Resources Ltd. (TSX:TCK.B), which posted an adjusted profit of $328 million, or 56 cents per share, in the first quarter, down from $544 million, or 93 cents per share in the same period last year. That beat analyst estimates of 37 cents a share.

Teck also said it achieved all-time record first quarter coal sales of 6.6 million tonnes despite relatively weak market conditions and repairs at Westshore terminals which continued into early February. Still, its shares fell 41 cents to C$25.60.

"I think it is a very strong company that had strong earnings, but certainly it appears that the macro environment, that is the Chinese PMI which was below consensus, overwhelmed their results," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

"When you think about one stock in Canada that is most thought of as being a Chinese play, it's Teck Resources."

The energy sector was slightly lower as the June crude contract on the New York Mercantile Exchange dipped one cent to US$89.18 a barrel. Canadian Natural Resources (TSX:CNQ) dropped 47 cents to C$29.52.

Encana reported a US$431-million net loss, or 59 cents per share, and $179 million or 24 cents per share of operating earnings in the three months ended March 31. The consensus estimate had been for nine cents per share of operating income, according to Thomson Reuters. Its shares slipped 33 cents to $18.96.

The gold sector led decliners as bullion continued to lose its appeal with the component down 25 per cent this month alone. The gold sector lost over two per cent Tuesday as the June bullion contract was off $12.40 at US$1,408.80 an ounce. Goldcorp (TSX:G) faded 88 cents to C$28.44 and Barrick Gold Corp. (TSX:ABX) fell 48 cents to $18.01.

Telecoms were also weak as Rogers Communications gave back $1.80 to $50.28.

Rogers said after the markets closed Monday that quarterly net income rose 15 per cent to $414 million. Earnings ex-items were 80 cents a share, three cents better than expected. However, revenue missed, coming in at $2.94 billion, less than the $3.06 billion that analysts expected. Also, 32,000 postpaid subscribers signed up in the quarter in its wireless division, compared with 47,000 a year earlier.

The tech sector advanced as BlackBerry closed up 37 cents at $14.74 after announcing that the keyboard version of its new smartphone will arrive in Canadian stores on May 1. The BlackBerry Q10 will first be stocked by carriers Rogers (TSX:RCI.B), Bell Mobility (TSX:BCE) and Telus (TSX:T).


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