TSX closes higher on manufacturing, employment data

The Canadian dollar closed above parity with the greenback for the first time since late October, 2011. The loonie was up 0.37 of a cent to 100.09 cents US.

U.S. markets were also higher with traders encouraged by employment data issued two days before the release of the U.S. government’s non-farm payrolls report for January. Payroll firm ADP said the American private sector created 170,000 jobs last month. Economists were looking for the U.S. economy to have created a total of 150,000 jobs in January.

The Dow industrials rose 83.55 points to 12,716.46, the Nasdaq was up 34.43 points to 2,848.27 and the S&P 500 index was ahead 11.67 points at 1,324.08.

The Institute for Supply Management said that its U.S. manufacturing index for January came in at 54.1, slightly short of economist expectations for a 54.5 reading.

“We have reasons to be optimistic with the recent signs of improving economic strength, including the global (purchasing managers index) numbers,” said Tim Caulfield, vice-president and director of equity research at Bissett Investment Management in Calgary.

“The U.S. PMI was a slight miss but still a pretty strong level and clearly indicating expansion in the manufacturing sector and we’ve seen some improvements in labour markets in the U.S.”

In China, two surveys gave mixed signals on manufacturing activity in January but both showed it largely unchanged.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index rose 0.2 points to 50.5 from December’s 50.3 on a 100-point scale on which numbers above 50 indicate growth.

HSBC Corp. said its HSBC China Manufacturing PMI was little changed at 48.8 from December’s 48.7, suggesting a “moderate deterioration.”

“Both indicators suggest China’s economy is coming in for a soft landing, taking a step further toward dispelling hard-landing concerns,” said BMO Capital Markets senior economist Benjamin Reitzes.

The Chinese government moved to slow the economy in 2011 to deal with high inflation, partly through tightening lending requirements at banks.

Beijing has also announced stimulus for the struggling private business sector in the form of tax breaks and a US$2.5-billion fund to finance new small businesses.

China has been a main pillar of support for a global economy still struggling to recover from the financial crisis and subsequent recession of 2008. Its strong economic growth has been a big plus for oil and metal prices and commodity stocks on the resource-heavy TSX.

Other data showed that Europe’s manufacturing sector is performing better than forecast.

The financial sector was up one per cent. Royal Bank (TSX:RY) gained 91 cents to $53.28 and Bank of Montreal (TSX:BMO) improved by 51 cents to $58.80.

The tech sector was ahead 1.88% with shares in information technology service provider CGI Group up 61 cents to $20.86 even as the company posted lower profits and softer revenue. However, contract bookings were higher in the quarter.

The base metals sector climbed 1.39% while the March contract for copper rose five cents to US$3.84 a pound following the manufacturing data. China is the largest consumer of copper, which is viewed as an economic bellwether because it is used in so many businesses. HudBay Minerals (TSX:HBM) gained 29 cents to C$12 and Ivanhoe Mines (TSX:IVN) improved by 46 cents to $16.63.

Railway stocks rose alongside mining stocks with Canadian National Railways (TSX:CNR) ahead $1.09 to $76.72.

The energy sector was up a slight 0.06% as the March crude contract on the New York Mercantile Exchange fell 87 cents to US$97.61 a barrel.

Oil prices shed early gains after the latest U.S. inventory figures showed a higher than expected increase in crude supplies. The Energy Information Administration reported inventories rose by 4.2 million barrels in the week ended Jan. 27, against expectations of a rise of three million barrels.

Cenovus Energy (TSX:CVE) climbed 70 cents to C$37.29.

Suncor Energy Inc. (TSX:SU) reported quarterly earnings of $1.43 billion or 91 cents a share amid higher oil prices. Revenues for the quarter were $10.1 billion versus $9.3 billion a year earlier. Suncor also said crude is starting to flow out of its Libyan operations following a bloody civil war in the North African country. Its shares were off three cents to $34.51.

Traders also took in a major acquisition in the sector.

AltaGas Ltd. of Calgary (TSX:ALA) is buying natural gas businesses in Alaska in a deal worth more than US$1.1 billion. The Calgary gas processor and pipeline operator says it will buy gas distribution company Continental Energy Systems and part ownership of a gas storage terminal being built in Alaska. AltaGas shares added 10 cents to $30.38.

The gold sector was a drag even though bullion prices advanced, with the April gold contract in New York up $9.10 to US$1,749.50 an ounce. Barrick Gold Corp. (TSX:ABX) faded 17 cents to C$49.29.

Consumer staples were also lower as grocer Metro Inc. (TSX:MRU.A) fell $1.50 to $53.24.

In other corporate developments, Amazon’s stock fell after the online retailer announced a sharply lower fourth-quarter profit, revenue that missed analysts estimates and a disappointing forecast for the current period. Its shares tumbled $14.98 to US$179.46.

Yellow Media (TSX:YLO) said it will keep its Canpages online phone directory business but streamline its print operations and cut jobs as it refocuses on Internet services. Its shares fell 1.5 cents to 18 cents.