TSX Ends Higher Ahead Of Fed Policy Meet - Canadian Commentary

(RTTNews) - Canadian stocks ended higher for a second straight session on Monday, tracking rising U.S. and European markets, with some positive macroeconomic data ahead of the two-day U.S. Federal Reserve's policy review meet beginning Tuesday. Investors await cues from the the meet with focus on the US$85 billion monthly bond-buying program taper, even as analysts remain divided on whether the Fed will announce any cut to its quantitative easing schedule.

Elsewhere, the Asian markets fell to a three-month low overnight, with uncertainty about the path of U.S. monetary policy and some lackluster Chinese factory activity data weighing on investor sentiment. Both the U.S. and European equity markets trended higher, after data showed that Germany' manufacturing purchasing managers' index increased in December to its highest level in thirty months.

The S&P/TSX Composite Index closed Monday at 13,184.41, up 58.71 points or 0.45 percent. The index scaled an intraday high of 13,226.35 and a low of 13,125.68.

Crude oil ended higher on Monday, even as investors awaited the outcome of the U.S. Federal Reserve policy review meet beginning Tuesday, anticipating a cut to its bond-buying program. Oil also reacted to news that the scheduled reopening of three Libyan ports last week was put on hold under pressure from rebels. Reports suggest the ports may not become operational for a considerable period of time.

The Energy Index dropped 0.22 percent, with U.S. crude oil futures for January delivery, the most actively traded contract, gaining $0.88 or 0.9 percent to close at $97.48 a barrel Monday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) shed 1.14 percent while Suncor Energy Inc. (SU.TO) gained 0.59 percent. Talisman Energy Inc. (TLM.TO) dropped 1.37 percent, while Encana Corp. (ECA.TO) surrendered 1.20 percent.

The Information Technology Index added 1.49 percent, with smartphone maker BlackBerry Limited (BB.TO) adding 2.02 percent.

The Diversified Metals & Mining Index inched up 0.02 percent, with First Quantum Minerals Ltd. (FM.TO) dropping 0.06 percent and Lundin Mining Corp. (LUN.TO) down 0.49 percent. Teck Resources Limited (TCK.B.TO) gained 0.70 percent, while Osisko Mining Corporation (OSK.TO) gathered 1.80 percent.

The Capped Materials Index moved up 0.55 percent. Fertilizer maker, Potash Corp. (POT.TO) dipped 0.37 percent, while Agrium Inc. (AGU.TO) gained 0.16 percent.

Gold futures ended higher for a second straight day, mainly on a short covering rally even as investors awaited cues over possibilities of a taper down by the U.S. Federal Reserve of its quantitative easing program. Gold also found support with the dollar trading lower against a basket of major currencies.

The Global Gold Index gained 0.80 percent, with gold futures for February delivery, the most actively traded contract, adding $9.80 or 0.8 percent to close at $1,244.40 an ounce Monday on the Nymex.

Among gold stocks, Kinross Gold Corp. (K.TO) ended flat at $4.88 a share, while Barrick Gold Corp. (ABX.TO) added 1.63 percent. Yamana Gold Inc. (YRI.TO) moved up 0.87 percent, while IAMGOLD Corp. (IMG.TO) gained 1.37 percent.

The Financial Index added 0.65 percent with Bank of Montreal (BMO.TO) up 1.14 percent, Royal Bank of Canada (RY.TO) up 1.13 percent, the Bank of Nova Scotia (BNS.TO) up 0.67 percent, and Toronto-Dominion Bank (TD.TO) up 1.06 percent.

The Capped Industrials Index moved up 0.40 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) adding 2.23 percent.

Valeant Pharmaceuticals International, Inc. (VRX.TO) gained 3.94 percent after indicating it would acquire Solta Medical, Inc. (SLTM) for $2.92 per share in cash, representing a 40 percent premium to Solta's latest closing price.

Constellation Software Inc. (CSU.TO) jumped 5.19 percent after announcing plans to acquire Total Specific Solutions B.V. for about 240 million euros, through its wholly-owned unit Constellation Software Netherlands B.V

Communications services company Wi-LAN Inc. (WIN.TO) dropped 1.20 percent after announcing a patent assignment agreement with Panasonic Corp. Pursuant to the deal, Panasonic will provide a WiLAN subsidiary, Collabo Innovations Inc., certain patents from its subsidiary Panasonic Automotive & Industrial Systems Co.

Meanwhile, precious metals producer Primero Mining Corp. (P.TO) dived 6.71 percent after revealing it would acquire Brigus Gold Corp's (BRD.TO) in exchange of 0.175 of its common share for each Brigus share.

Aviation services provider Discovery Air Inc. ( DA_A.TO) slipped 1.46 percent despite reporting improved third-quarter profit of C$3.05 million or C$0.19 per share compared to C$1.23 million or C$0.08 per share in the last year.

In economic news from Canada, foreign investment in Canadian securities amounted to $4.4 billion in October and was focused on instruments from the corporate sector. Meanwhile, Canadian holdings of foreign securities moved lower, hit by sale of US equities.

In economic news from the U.S, a Federal Reserve report on Monday showed U.S. industrial production rose much more than expected in November, with utilities output jumping sharply amid colder-than-average temperatures. Industrial production surged 1.1 percent in November, much better than the 0.6 percent increase projected by economists. The Fed said the data for October was upwardly revised to show a 0.1 percent uptick compared to the originally reported 0.1 percent drop.

A Federal Reserve Bank of New York report on Monday showed its index of regional manufacturing activity bounced back into positive territory in December, with its general business conditions index climbing to a positive 1.0 in December from a negative 2.2 in November. Economists expected the index to climb to 4.5.

Meanwhile, a Labor Department report on Monday showed a notable upward revision to the pace of U.S. labor productivity growth in the third quarter of 2013, with output increasing much more than previously estimated. Labor productivity increased 3.0 percent in the third quarter compared to the initial estimate of 1.9 percent growth. Economists expected the pace of growth to be upwardly revised to 2.8 percent. The upward revision to the increase in productivity, a measure of output per hour, reflected stronger than previously reported output growth.

China's factory sector activity slowed in December as output growth weakened and employment contracted further, preliminary results of a survey published by Markit Economics revealed Monday. The headline HSBC purchasing managers' index dropped to a three-month low of 50.5 in December from 50.8 in November. However, the above-50 reading indicates expansion of the sector.

From the eurozone, Germany's manufacturing purchasing managers' index increased in December to its highest level in thirty months, indicating a significantly faster growth in activity, data from a survey by Markit Economics and BME showed. The seasonally adjusted manufacturing purchasing managers' index climbed to 54.2 in December from 52.7 in November. Economists anticipated a reading of 52.9.

Meanwhile, activity in the eurozone private sector increased at a faster pace in December, better than what economists expected, data from a recent survey revealed. The seasonally adjusted composite output index, which gauges the performance of the manufacturing sector and the service sector, advanced to 52.1 in December from 51.7 in November, a survey conducted by Markit Economics showed. Economists expected a reading of 51.9.

A report from the Eurostat revealed trade surplus in the eurozone rose to EUR 17.2 billion in October from EUR 9.6 billion in October last year. In September, the surplus amounted to EUR 10.9 billion.