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TSX Ends Higher On U.S. Fiscal Cliff Deal - Canadian Commentary

1/2/2013 4:38 PM ET

Canadian stocks extended gains for a second straight day to end higher Wednesday, tracking rising commodities and global equity markets after U.S. lawmakers approved the critical budget bill to avert the fiscal cliff. Commodities were supported data from China that showed the country's official manufacturing purchasing managers' index held steady in December, matching November's seven-month high.

The U.S. House of Representatives voted late Tuesday to approve a Senate-backed deal to avert the fiscal cliff crisis associated with automatic tax hikes and huge spending cuts. The House approved the original version of the bill in a 257- 167 vote. Earlier, the Senate had approved the measure in a 89-8 vote Tuesday.

The bill provides the middle-class with permanent low tax rates, while it would rise to a maximum of 39.6 percent for the wealthy. Taxes will increase for individuals whose income exceed $400,000 and households having more than $450,000. The bill also extends the unemployment insurance for a year and the tax credits that help poor and middle-class families to five. A decision on spending cuts have been delayed by two months.

The S&P/TSX Composite Index closed Wednesday at 12,540.77, up 107.24 points or 0.86 percent. The index touched an intraday high of 12,588.75 and a low of 12,439.25.

The Diversified Metals & Mining Index surged 3.77 percent, with Teck Resources Limited (TCK.B.TO) gaining 3.73 percent, First Quantum Minerals Ltd. (FM.TO) up 1.19 percent, and Lundin Mining Corp. (LUN.TO) gained 2.54 percent.

The Global Gold Index gained 0.78 percent, with gold futures for February delivery moving up $13.00 or 0.8 percent to close at $1,688.80 an ounce Wednesday on the Nymex.

The Capped Materials Index moved up 1.79 percent, with Potash Corporation of Saskatchewan Inc. (POT.TO) gained 0.47 percent.

Among gold stocks, Barrick Gold Corp. (ABX.TO) was up 0.75 percent, Kinross Gold Corp. (K.TO) up 0.72 percent, Yamana Gold Inc. (YRI.TO) lost 0.23 percent, and Goldcorp. Inc. (G.TO) gained 1.04 percent.

The Energy Index gained 0.93 percent, with U.S. crude oil futures for February delivery surging $1.30 or 1.4 percent to close at $93.12 a barrel Wednesday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) moved up 2.14 percent, Encana Corp. (ECA.TO) shed 1.63 percent, and Canadian Natural Resources Limited (CNQ.TO) gained 1.99 percent.

Meanwhile, Petrobank Energy and Resources (PBG.TO) gained 1.46 percent, after announcing the completion of a reorganization. The move will result in Petrobank shareholders effectively receiving Petrobank's share holdings in PetroBakken while maintaining their interest in the remaining Petrobank assets.

The Financial Index added 0.37 percent, with TD Bank Group (TD.TO) down 0.67 percent, The Bank of Nova Scotia (BNS.TO) up 0.07 percent, Bank of Montreal (BMO.TO) was up 0.54 percent, and Royal Bank of Canada (RY.TO) gained 1.04 percent.

The Capped Industrials Index gained 2.10 percent, with transportation systems maker Bombardier Inc. (BBD.A.TO, BBD.B.TO) advancing 2.39 percent and Canadian Pacific Railway (CP.TO) up 3.17 percent.

The Information technology Index inched up 0.50 percent, with Blackberry maker Research In Motion (RIM.TO) surrendering 1.95 percent.

International Mining & Infrastructure Corporation plc confirmed making a proposal to Afferro Mining Inc. (AFF.V) regarding a possible offer, indicating not having yet received a formal response from Afferro. Shares of Afferro plummeted 23.81 percent.

In economic news from the U.S., the Institute for Supply Management said its purchasing managers index climbed to 50.7 in December from 49.5 in November, with a reading above 50 indicating an expansion by the manufacturing sector. Economists had expected the index to climb to 50.5.

Separately, a report from the Commerce Department showed that construction spending fell by 0.3 percent to a seasonally adjusted annual rate of $866.0 billion in November from the revised October estimate of $868.2 billion. The drop surprised economists, who had expected spending to increase by 0.6 percent.

China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, data released by the China Federation of Logistics & Purchasing showed yesterday.

Elsewhere, the eurozone manufacturing sector ended the year on a weak footing, with levels of production and new orders both contracting further in December, final survey data from Markit Economics showed. The final manufacturing Purchasing Managers' Index dropped marginally to 46.1 in December from 46.2 in November.

Meanwhile, Germany's EU harmonized inflation accelerated in December, while economists expected it to remain unchanged, preliminary data from the Federal Statistical Office showed. The harmonized index of consumer prices (HICP) increased 2.1 percent on an annual basis in December, after rising 1.9 percent in the previous month. Economists had forecast inflation to remain unchanged.

by RTT Staff Writer

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