TSX advances amid strong U.S. consumer confidence, BMO earnings

The S&P/TSX composite index rose 40.1 points to 12,740.47 also finding lift from financials after Bank of Montreal (TSX:BMO) handed in earnings that beat expectations.

BMO kicked off the big banks’ quarterly reporting season by handing in first-quarter profits that rose 34% to $1.1 billion or $1.63 a share. On an adjusted basis, earnings were $1.42 per share, beating analyst estimates by six cents. Revenue increased to $4.12 billion from $3.47 billion and its shares rose 55 cents to $58.56.

BMO profit rises to $1.1 billion in Q1

The bank benefited from its major expansion into the U.S. with the recent acquisition of Milwaukee-based Marshall & Ilsley Corp. and analysts believe those deals will continue to help boost results.

“The acquisitions that banks have done in the U.S. will be accretive on a going forward basis,” said Sadiq Adatia, chief investment officer at Sun Life Global Investments.

“I think that’s exactly what the banks envisioned when they first started purchasing these things that even though there was a slowdown in the U.S., that eventually the country will get back on track and that will help diversify some of the streams that they’re getting from just the Canadian sources.”

The bank’s earnings lifted the financial sector 0.58%.

Elsewhere in the group, Royal Bank (TSX:RY), which reports Thursday, gained 59 cents to $55.62. TD Bank (TSX:TD) and National Bank (TSX:NA) also report Thursday.

The TSX Venture Exchange gained 13.69 points to 1,693.19.

A major decliner was engineering group SNC-Lavalin Group Inc. (TSX:SNC). The company announced it needs to investigate $35 million in undocumented payments booked last year, it is cutting its 2011 profit forecast by 18% and delaying the release of its fourth-quarter and full-year financial results. Its shares tumbled $9.94 or 20.55% to $38.43.

Rising copper and gold prices helped push the commodity-sensitive Canadian dollar up 0.38 of a cent to 100.46 cents US.

U.S. markets advanced after data showed that U.S. consumer confidence in February rose dramatically to the highest level since a year ago.

The Conference Board’s consumer confidence index now stands at 70.8, up from a revised 61.5 in January, helped by consumers’ improving assessment of the job market. Analysts had expected a reading of 63.

“I’ve been bullish on the U.S. since mid-2011 and the reason for that has been that I’ve been seeing those signs,” added Adatia.

“Housing values have been somewhat stabilized and the consumer has been feeling more confident because the unemployment number has actually been decreasing so consumers say, my housing value has stabilized, they’re getting some job growth, the economy seems to be picking up some traction — hey, things are not too bad.”

At the same time, the U.S. Commerce Department said orders for durable goods — products that are expected to last at least three years — fell four per cent last month, much more than the 1.1% drop that economists were expecting. So-called core capital goods, which are viewed as a good measure of business investment plans, fell 4.5%, the biggest drop in a year. Demand for these goods hit an all-time high in December as companies rushed to take advantage of expiring tax breaks on purchases of capital goods.

The Nasdaq composite index was 20.6 points higher to 2,986.76 while the S&P 500 index gained 4.59 points to 1,372.18.

The gold sector was ahead 1.35% as the April contract rose $13.50 to US$1,788.40 an ounce. Goldcorp Inc. (TSX:G) rose $1.42 to $49.77.

The TSX energy sector was off per 0.12 cent as oil prices dipped for a second day with the April crude contract on the Nymex down $2.01 to US$106.55 a barrel. Cenovus Energy (TSX:CVE) lost 20 cents to $38.56.

Crude had jumped more than 14% during February before easing the last two sessions, largely over concerns about Iran’s nuclear program and the worry about supply disruptions from the Mideast. The sudden surge has raised concerns about how higher crude prices could affect the U.S. economic recovery, pressure corporate earnings and worsen a European recession.

The base metals sector was down 0.18% even as copper prices continued to surge with the March contract up three cents to US$3.92 a pound. Prices for the metal are up about 3.5% this month on signs of improving economic growth in the U.S. and hopes that China will further relax lending standards to encourage growth. China is the world’s biggest consumer of the metal.

Shares in molybdenum producer Thompson Creek Metals Co. Inc. (TSX:TCM) fell $1.36 or 15.7% to $7.30 as it reported a small quarterly profit of US$800,000. Revenue fell to US$116.7 million from US$156.8, reflecting a sharp drop in the price of molybdenum, which is used in high-strength steel alloys.

Elsewhere in the sector, First Quantum Minerals (TSX:FM) rose 11 cents to $22.83.

In other earnings news, Ritchie Bros. Auctioneers Inc. (TSX:RBA), the world’s largest auctioneer of industrial equipment, reported its net profits rose to US$76.6 million, or 72 cents a share for 2011. That compared to net earnings of US$65.7 million or 61 cents in 2010. Ritchie said its fourth quarter profits more than doubled to $26.8 million. Ritchie shares lost $2.06 to $23.52.