TSX shrugs off weak oil, gold prices on solid earnings

By Alastair Sharp
A man walks past an old Toronto Stock Exchange sign in Toronto
A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

By Alastair Sharp

TORONTO (Reuters) - Decent earnings reports from several resource stocks and a major telecom company helped Canada's main stock index keep intact a string of all-time highs on Thursday, despite slips in oil and gold prices weighing on the market.

With the Toronto Stock Exchange's S&P/TSX composite index hitting record highs in each of the past three days, investors are watching to see whether second-quarter earnings would prompt fresh highs or a retrenchment.

"We've seen solid numbers posted by the likes of Potash, Teck, and Rogers," said Elvis Picardo, a strategist at Global Securities in Vancouver. "Today's action is underpinned by earnings, and that's a reassuring sign because ultimately it is earnings that drive the market."

Diversified miner Teck Resources added 1.3 percent to C$25.94 after just beating earnings estimates and saying global steel-making production needs to be cut to deal with oversupply in the market.

Fertilizer producer Potash Corp of Saskatchewan reported a smaller-than-expected slip in profit and upped its outlook. Its stock gained 0.3 percent, to C$38.92.

Rogers Communications Inc protected its wireless margins at the expense of subscriber growth as the country's largest wireless provider refreshes its business strategy. Its stock gained 1.1 percent to C$42.88.

But those gains were neutralized by slips in railway stocks and gold miners, the latter hurt by the lowest bullion prices in a month. [GOL/]

All told, the Toronto stock market's benchmark index was up just 0.07 point, at 15,394.45. Six of its 10 subgroups ended higher.

The TSX index has traded at record levels for much of July and touched a new high of 15,421.39 during the day. But analysts note the strong performance has been on light summer volumes, which can increase volatility.

"We don't see big volumes. You don't see the trend," said John Ing, president of Maison Placements Canada. "What we may see is we're bumping up to the highs, and frankly it's unsustainable. The market is richly valued right now."

Investors could quickly turn risk-averse if geopolitical tensions dramatically worsen in either Ukraine or the Middle East, with a disproportionate effect on cyclical sectors such as energy and materials, Global's Picardo said.

Sliding precious metals prices yanked gold miners lower, with Barrick Gold Corp falling 2.3 percent to C$19.66.

Talisman Energy dropped 1.8 percent, to C$11.76, as doubts grew about whether Spain's Repsol would be interested in buying all of Canada's fifth-largest petroleum company.

TransCanada Corp added 0.9 percent to C$56.08 a day after the Alberta government approved construction of an C$800 million pipeline.

($1=$1.07 Canadian)

(Additional reporting by Cameron French; Editing by Chizu Nomiyama,; Peter Galloway and James Dalgleish)