TSX Ends Higher On U.S. Data - Canadian Commentary

(RTTNews) - Canadian stocks ended higher Thursday, driven by the financial and health care sectors, after some upbeat data that showed first time unemployment benefit claims in the U.S. dropped more than expected. Investors now await some key monthly non-farm payrolls data due tomorrow, while continuing to mull over the the Federal Reserve policy meet minutes that gave no indications of future reductions in its quantitative easing program.

In an upbeat sign for the U.S. economy, a report from Labor Department showed first-time claims for U.S. unemployment benefits fell more than expected to a one-month low in the week ended January 4. The less volatile four-week moving average also declined from the previous week's revised average.

Minutes of the Federal Reserve's most recent policy meet that concluded yesterday indicated the central bank tapered its massive bond-buying program in December due to diminishing returns on the billions spent to keep the economic recovery going. Policy makers worried about the potential for excessive risk-taking in the financial sector, similar to the speculative lending that caused the panic of 2007 in the first place.

The S&P/TSX Composite Index closed Thursday at 13,629.41, up 14.78 points or 0.11 percent. The index scaled an intraday high of 13,644.16 and a low of 13,585.01.

Crude oil dropped for a second straight session to end at a seven-month low on Thursday, ahead of the monthly non-farm payrolls data due tomorrow with investors continuing to weigh the prospects of increased oil supply from Libya.

The Energy Index dropped 0.67 percent, with U.S. crude oil futures for February delivery, the most actively traded contract, shedding $0.67 or 0.7 percent to close at $91.66 a barrel Thursday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) shed 0.37 percent, while Suncor Energy Inc. (SU.TO) slipped 0.48 percent. Talisman Energy Inc. (TLM.TO) dropped 2.00 percent, while Encana Corp. (ECA.TO) dropped 0.11 percent.

The Health Care Index gained 1.58 percent with drug maker Valeant Pharmaceuticals International, Inc. (VRX.TO) up 3.51 percent.

The Information Technology Index edged up 0.08 percent, with smartphone maker BlackBerry Limited (BB.TO) moving up 2.93 percent.

The Diversified Metals & Mining Index gained 0.74 percent, with Teck Resources Limited (TCK.B.TO) slipping 2.13 percent and First Quantum Minerals Ltd. (FM.TO) down 2.50 percent.

The Capped Materials Index surrendered 0.81 percent, with fertilizer giant Potash Corp. of Saskatchewan Inc. (POT.TO) slipping 0.72 percent.

Gold futures snapped a three-day loss to end higher, ahead of some crucial monthly non-farm payrolls data due tomorrow, even as the dollar weakened against some select currencies.

The Global Gold Index dropped 0.85 percent, with gold futures for February delivery, the most actively traded contract, gaining $3.90 or 0.3 percent to close at $1,229.40 an ounce Thursday on the Nymex.

Among gold stocks, Kinross Gold Corp. (K.TO) edged down 2.24 percent, while Barrick Gold Corp. (ABX.TO) shed 0.67 percent. Yamana Gold Inc. (YRI.TO) lost 2.64 percent.

The Financial Index moved up 0.50 percent with Bank of Montreal (BMO.TO) up 0.30 percent, Royal Bank of Canada (RY.TO) up 0.17 percent, the Bank of Nova Scotia (BNS.TO) up 0.17 percent, and Toronto-Dominion Bank (TD.TO) slipped 0.02 percent.

The Capped Industrials Index gained 0.56 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) slipping 2.66 percent.

In economic news from the U.S, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits dropped more than expected in the week ended January 4. Initial jobless claims declined to 330,000, a decrease of 15,000 from the previous week's revised figure of 345,000. Economists expected jobless claims to edge down to 335,000 from the 339,000 originally reported for the previous week.

Jobless claims came in at its lowest level since dropping to 305,000 in the week ended November 30. The less volatile four-week moving average fell to 349,000, a decrease of 9,750 from the previous week's revised average of 358,750.

Consumer credit in the U.S. increased less than expected in November, a report from the Federal Reserve showed. Consumer credit rose $12.3 billion in November after jumping by $17.9 billion in October. Economists expected credit to increase by about $14.2 billion.

China's consumer price inflation eased for a second consecutive month in December to reach its weakest level in seven months, data from the National Bureau of Statistics revealed Thursday. The annual consumer price inflation fell to 2.5 percent in December from 3 percent in November. Economists anticipated a slowdown to 2.7 percent. On a monthly basis, the consumer price index rose 0.3 percent. In the whole of 2013, inflation was 2.6 percent, well below the government's target of 3.5 percent.

China's producer prices extended its decline to 22 months in December, fueling concerns over industrial overcapacity.

The European Central Bank left interest rates unchanged at a record low at the start of the year, as it battles deflationary tendencies, while a gradual recovery has become more evident in the 18-nation economy. The ECB kept the main refinancing rate unchanged at 0.25 percent on Thursday, for a second straight month following their meeting in Frankfurt. The decision was in line with economists' expectations. The marginal lending facility rate was held at 0.75 percent. The deposit facility rate was kept at zero, where it has remained since July 2012.

Meanwhile, European Central Bank President Mario Draghi in his customary post-decision press conference in Frankfurt reiterated that the 18-nation economy is set to experience a protracted period of low inflation and asserted that the bank will maintain easy policy for as long as needed.

Elsewhere in Europe, the Bank of England kept its monetary policy unchanged as policymakers closely monitor the economic recovery and developments in the U.K. labor market. The nine-member Monetary Policy Committee headed by Governor Mark Carney, maintained the key interest rate at a record-low 0.50 percent. The central bank also retained the quantitative easing at GBP 375 billion.