Commodities send TSX higher

The Canadian dollar was down 0.03 of a cent at 97.44 cents U.S. amid data showing inflation pressures remain weak.

Statistics Canada said the consumer price index rose one per cent in March compared with a year earlier, down from a 1.2 per cent rise in February. That was lower than the 1.1 per cent reading that economists had expected.

U.S. markets were also positive at the end of a week where a rally that has gone on practically non-stop since the start of the year looked shaky.

The Dow Jones industrials edged up 10.37 points to 14,547.51, the Nasdaq composite index was up 39.69 points to 3,206.06 and the S&P 500 index advanced 13.64 points to 1,555.25.

Earnings news continued to come in mixed as General Electric Corp. reported a profit of $3.5 billion, or 34 cents per share, on revenue of $35 billion. During last year’s first quarter, GE earned $3 billion on $35.2 billion in revenue.

GE shares fell 4.06 per cent to US$21.75 as GE said that deteriorating economic conditions in Europe dragged down results, especially in sales of power and water equipment.

IBM shares dropped 8.28 per cent to $190 after it said its first-quarter profit fell one per cent due to delays in closing several large software and mainframe computer deals.

IBM said it earned $3.03 billion, or $2.70 per share in the quarter. Ex-items, earnings came in at $3, five cents below expectations. Revenue of $23.41 billion missed forecasts of $24.7 billion.

McDonald’s earned $1.27 billion, or $1.26 per share in the latest quarter. That compared with $1.266 billion, or $1.23 per share, a year ago. Revenue edged up one per cent to $6.6 billion. Analysts expected a profit of $1.26 per share on revenue of $6.59 billion and its shares drifted down 1.95 per cent to $99.92.

Markets got off to a weak start Monday amid data showing growth in China coming in lower than expected. Losses picked up mid-week after the International Monetary Fund downgraded its estimates for global growth.

Worries about slowing demand sent commodity prices sharply lower and sparked a sell-off on the TSX, leaving the main index down about three per cent year to date. The TSX lost 2.2 per cent this past week.

Additionally, worries that the worst-hit countries of the eurozone debt crisis might use their gold reserves to deal with their problems helped send gold prices to their lowest levels in more than two years.

“I don’t want to say some commodity supercycle is over, but there is no question that the bloom is off the rose with respect to commodity and resource investing,” said Garey Aitken, chief investment officer at Bissett Investment Management in Calgary.

New York indexes were still up substantially for the year, with the Dow industrials remaining up about 11 per cent year to date. But U.S. markets were still down sharply for the week and many analysts say they wouldn’t be at all surprised to see them step back a bit after running up so far, so fast.

Gains on the TSX were largely due to a 2.3 per cent rise in the base metals group while the May copper contract down six cents to US$3.15 a pound, adding up to a 5.6 per cent drop this week that was the biggest since mid-December, 2011. With today’s close, copper prices have entered a bear market, having fallen 20 per cent from the February 2012 peak.

First Quantum Minerals (TSX:FM) rose 55 cents to $16.66 and Turquoise Hill Resources (TSX:TRQ) gained 49 cents to C$5.82.

The gold sector gained about 1.5 per cent as June bullion gained $3.10 to US$1,395.60 an ounce, losing seven per cent this past week and falling below US$1,400 for the first time in two years. The sector is down about 37 per cent year to date as gold producers sustained sharp losses amid sharply rising costs just to get the precious metal out of the ground.

The TSX gold sector is now at levels last seen in 2005, when gold prices hovered around $500 an ounce.

“So obviously, what we’ve seen here in the last few weeks is the price of gold stocks have been off a lot more and that’s understandable just given the inherent operating leverage in a mining company,” added Aitken.

“But it also speaks to cost increases in the industry and I think probably challenges in terms of execution, just bringing mines onstream on time on budget.”

Barrick Gold (TSX:ABX) climbed 21 cents to C$18.65 while Iamgold (TSX:IMG) rose five cents to C$5.

The tech sector rose one per cent as BlackBerry (TSX:BB) improved by 39 cents to $14.19.

Consumer discretionary stocks were ahead with auto parts giant Magna International (TSX:MG) ahead $1.47 to $57.60.

Industrials were also supportive as Canadian National Railways (TSX:CNR) gained $1.48 to $98.48.

The energy sector led decliners, down 0.4 per cent while the May crude contract on the New York Mercantile Exchange was up 28 cents to US$88.01 a barrel. Suncor Energy (TSX:SU) slipped 20 cents to C$28.13.

The TSX Venture Exchange added 6.13 points to 939.07.