Oils, golds support TSX amid weak U.S. economic data

The final revision to American economic growth in the first quarter showed that U.S. gross domestic product shrank 2.9%. That was larger than the 2% contraction economists had expected. However, the decline was due in large part to severe winter weather and the damage to the economy was expected to be short-lived.

“It doesn’t matter what we throw at the market, it seems to just show its resilience and deflect it,” said Kash Pashootan, portfolio manager at First Avenue Advisory, a Raymond James company, in Ottawa.

“So we have seen uncertainties from Russia/Ukraine, from Iraq, economic data that hasn’t been overly exciting. In fact, we saw U.S. GDP numbers . . . (that were) really disappointing and it had no impact on the markets at all.”

Other data showed that U.S. durable goods orders fell one per cent in May, against an expected one per cent gain. The drop was driven by sharp reduction in demand for military equipment.

The Canadian dollar ticked up 0.19 of a cent to 93.27 cents US as the greenback weakened in the wake of the data.

U.S. indexes were higher with the Dow Jones industrials ahead 49.38 points to 16,867.51, the Nasdaq up 29.4 points to 4,379.76 and the S&P 500 index advancing 9.55 points to 1,959.53.

The gold sector rose about 0.55% as August bullion added $1.30 to US$1,322.60 an ounce.

Oil prices edged up 47 cents to US$106.50 a barrel. Prices have advanced steadily over the last couple of weeks amid a rising insurgency in Iraq but stepped back over the last two days as fears receded that the insurgency would greatly affect the country’s oil production and exports.

The TSX energy sector was ahead 0.17%.

Support also came from the industrials group, up 0.3%.

The base metals sector was the major decliner, down 1.56% even as July copper rose two cents to US$3.17 a pound. The base metals sector has been a major decliner, losing about half of its gains for the year over the past month.

At the same time, indexes in Toronto and New York are close to record highs and investors wonder where the next catalyst is coming from. Also, inflationary pressures are building, raising concerns about when the U.S. Federal Reserve might boost interest rates.

On the corporate front, Pengrowth Energy Corp. (TSX:PGF) announced a doubling of the value of its proven reserves at its flagship Lindbergh bitumen project in Alberta from $1 billion to $2 billion. Pengrowth shares advanced 14 cents to $7.46.

In the U.S., General Mills Inc. posted quarterly earnings of US$404.6 million, or 65 cents per share. Excluding one-time items, it earned 67 cents per share, which was below the 72 cents Wall Street expected. Total sales declined 3% to $4.28 billion, which was also below the $4.42 billion analysts expected and its shares fell 3.6% to US$51.76.

And CBS and other TV companies advanced after the U.S. Supreme Court ruled that startup Internet company Aereo would have to pay them when it takes television programs from the airwaves and allows subscribers to watch them on portable devices. CBS rose 6.19% and Walt Disney, which owns ABC, rose 1.48%.