TORonTO – The Toronto stock market chalked up a solid advance Monday with traders feeling more confident that American politicians can come together to agree on a budget deal by the end of next month.
Without such a deal, the U.S. economy risks going over a so-called fiscal cliff – a severe setback from a combination of automatic spending cuts and the expiration of Bush-era tax cuts.
The S&P/TSX composite index jumped 126.99 points to 12,004.71, while the TSX Venture Exchange gained 11.19 points to 1,246.53.
The telecom sector was in focus after BCE Inc. and Astral Media Inc. said they are submitting a new acquisition proposal to the CRTC, saying theyve found ways to address the regulators concerns over the level of ownership concentration in some markets. The CRTC recently rejected the original $3.4-billion proposal for Bell Canadas parent to buy the Montreal-based radio, television and media company. BCE shares gained seven cents to $42.06 while Astral shares climbed $1.45 or 3.27 per cent to $45.85.
The Canadian dollar traded above parity with the American currency, up 0.39 of a cent to 100.29 cents US as investors felt more comfortable taking on more risk.
U.S. indexes were also higher with the Dow Jones industrials surging 153.74 points to 12,742.05, the Nasdaq climbed 40.67 points to 2,893.81 and the S&P 500 index was ahead 20.13 points to 1,380.01.
Fiscal cliff concerns started to ease Friday afternoon following a meeting between congressional leaders and U.S. President Barack Obama, with both Republicans and Democrats striking a more conciliatory stance.
And on Sunday, Obama said: I am confident we can get our fiscal situation dealt with.
While there is still room for plenty of disappointment in resolving this potential crisis, markets were on the lookout for anything positive out of the negotiations.
“The sticking point remains extending the Bush-era tax cuts for the wealthy and neither side has yet to cede ground on this issue,” said BMO Capital Markets senior economist Sal Guatieri.
“However, Fridays meeting marks progress and, if anything, is a welcome change from the post-election sabre-rattling.”
Markets finished positive on Friday but prior to that the TSX had tumbled 3.9 per cent since the election Nov. 6 as a U.S. economic shock would impact economies around the world. A sudden slowing of economic growth would be bad news for a resource heavy market like Toronto, since a lessening of demand for oil and metals would put pressure on mining and energy stocks.
Meanwhile, the Dow industrial average has fallen five per cent as investors worry about higher dividend, capital gains and payroll taxes.
The energy sector also rose 1.4 per cent as oil prices gained ground for a second day on worries that oil supplies could be disrupted if the Israel-Hamas conflict engulfs countries elsewher in the Middle East, a huge producer of crude.
December crude on the New York Mercantile Exchange was up $2.14 to US$89.06 a barrel. Cenovus Energy improved by 64 cents to $33.03 while Suncor Energy gained 87 cents to $32.41.
The appetite for added risk extended to metals and December copper was six cents higher to US$3.52 a pound, taking the base metals sector up 0.7 per cent. Sherritt International rose nine cents to $4.83 while Teck Resources advanced 25 cents to $32.23.
The gold sector climbed 1.2 per cent while December bullion gained $13.80 to US$1,728.50 an ounce. Goldcorp Inc. was ahead 64 cents to $40.36 while Centerra Gold climbed 27 cents to $9.35.
All TSX sectors were higher with financials ahead one per cent. Royal Bank was 67 cents higher to $56.29 while Manulife Financial was up 11 cents to $12.04.
The industrials group was up one per cent while WestJet Airlines advanced 31 cents to $18.61.
Investors will also be monitoring latest developments in Greeces bailout saga amid hopes that the countrys euro partners and the International Monetary Fund will finally sign off on the release of at least C31.5 billion of cash the country needs to avoid going bankrupt.
Ministers from the eurogroup meet Tuesday ahead of a summit of their leaders later in the week that will discuss the European unios budget for the next few years.
In other corporate developments, the largest shareholder of Agrium Inc. wants to shake up the Canadian fertilizer companys board by installing its managing partner and four new independent directors, including a former federal agriculture minister. Jana has called on Agrium to spin off its retail arm as a separate company from its fertilizer business in order to unlock shareholder value. Agrium has rejected that idea and its shares were up $1.79 to $99.60.
Jovian Capital Corp. ran ahead 60 cents to $8.95 as said it plans a special dividend of $3 per common share. The Toronto-based wealth and asset manager says the dividend is based on proceeds from two sales made a year ago, the Horizons ETFs business sold last November and MGI Financial Inc. sold in October 2011.
Lowes Cos. were ahead seven per cent to US$34.21 in New York as it said Monday that its third-quarter net income surged 76 per cent to US$396 million, helped by lower costs and higher revenue, as the companys efforts to revamp its merchandise and prices appeared to be gaining traction. Its adjusted earnings without charges and its revenue both beat estimates.
French oil firm Total SA says it has sold a stake in an offshore oil field in Nigeria for US$2.5 billion to Chinese state oil company Sinopec Corp. China has been interested in expanding its oil holdings in Nigeria for some time.
European bourses were positive with Londons FTSE 100 index up 0.23 per cent, Frankfurts DAX ahead 0.59 per cent and the Paris CAC 40 up 0.62 per cent.
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