TORONTO - The Toronto stock market closed higher Monday as data showed the Canadian economy continuing to make a robust recovery from recession while the market also found support from higher commodity prices.
The S&P/TSX composite index jumped 91.55 points to 11,762.99, while the TSX Venture Exchange climbed 10.63 points to 1,514.07. Trading volumes were considerably lower than usual with U.S. markets closed for Memorial Day.
The Canadian dollar rose 0.77 of a cent to 95.83 US cents after Statistics Canada reported that gross domestic product grew at annualized rate of 6.1 per cent in the first quarter, better than the 5.8 per cent rate that economists had expected.
That showing followed a 4.9 per cent rise in the fourth quarter of 2009. GDP rose 0.6 per cent in March alone, which was better than the 0.5 per cent that had been forecast.
"V is the shape of economic victory, and there's no better way to describe Canada's real GDP performance in the last two quarters," said CIBC World Markets chief economist Avery Shenfeld.
The strong performance in the economy further persuaded analysts that the Bank of Canada will announce Tuesday that it is hiking interest rates by a quarter point to 0.5 per cent.
"Nobody could really argue that a quarter-point rate hike would be fatal now," added Shenfeld.
The bank has kept its key rate at 0.25 per cent since April 2009.
Meanwhile, investors are also looking forward to the release of May employment data for both Canada and the United States on Friday.
The base metals sector gained 1.66 per cent even as U.S. commodity markets were also closed. The July copper contract was unchanged at US$3.10 in electronic trading on the New York Mercantile Exchange. Teck Resources (TSX:TCK.B) gained 74 cents to C$36.54 and HudBay Minerals (TSX:HBM) rose 21 cents to C$12.15.
The July crude contract on the Nymex rose 47 cents in electronic trading to US$74.44, taking the energy sector up 1.54 per cent. Suncor Energy (TSX:SU) climbed 42 cents to C$32.50 and Canadian Oil Sands Trust (TSX:COS.UN) advanced 47 cents to C$28.64.
Consumer discretionary stocks were also supportive with shares in auto parts maker Magna International (TSX:MG.A) ahead $1.03 at $72.25.
The gold sector was negative even as bullion prices moved slightly higher, with the August gold contract in New York ahead $2.90 at US$1,217.90 an ounce.
The financial sector rose 0.24 per cent as the Canadian bank earnings season draws to a close. Scotiabank, (TSX:BNS) which reports earnings Tuesday, gained 23 cents to $48.25. It's been an uneven reporting season so far with Bank of Montreal (TSX:BMO) beating earnings expectations while Royal Bank (TSX:RY), CIBC (TSX:CM) and TD Bank (TSX:TD) missed some forecasts even as all the big banks reported huge gains in profits from a year ago.
Despite the positive showing on the TSX on the final day of May trading, it has been a decidedly negative month as investors remained focused on Europe's debt crisis while also worried about a slowdown of the Chinese economy.
The market was off 3.66 per cent in May amid concerns about slowing economic growth in the eurozone and the future of the euro currency itself.
Analysts characterized the markets as volatile and saw investors holding back as doubts remain the European Union can contain a debt crisis that has sent the euro to four-year lows.
The resource-heavy TSX was particularly hard hit, with the energy sector down 4.65 per cent in May and the metals and mines sector taking an 11.5 per cent hit.
At the same time, analysts don't seem to know how long this crisis will continue to cast a pall over markets.
"I just don't think they have a good handle on anything that's taking place over there," said Fred Ketchen, manager of equity trading at Scotia Capital.
"I don't know of any outstanding reason that presents itself that would convince me we're in for a new return to energized activity and optimistic views of the market. We're taking a rest and we may drift off further."
In other corporate news, shares in Bombardier Inc. (TSX:BBD.B) were off four cents at $4.85 even as the transportation giant was awarded a $241-million contract to supply a monorail system for the new financial district in Saudi Arabia's capital.
Jazz Air flight attendants have voted 99.5 per cent in favour of a strike. The Canadian Flight Attendants Union says the cabin crew for the airline (TSX:JAZ.UN) could go on strike, or be locked out, as early as June 16. Jazz units slipped a penny to $4.21.
Shareholders of Chariot Resources Ltd. (TSX:CHD) have overwhelmingly approved a takeover of the development stage copper miner by China Sci-Tech Holdings Ltd. in a deal that values Chariot at about $245 million. Chariot Resources added three cents to 66 cents.
Ram Power Corp. (TSX:RPG) has signed a letter of agreement to acquire Sierra Geothermal Power Corp. (TSXV:SRA) in a share-swap valued at $28.4 million. The companies announced that the non-binding agreement will allow Ram to buy all outstanding shares of Sierra Geothermal. Sierra's stockholders would receive one Ram share for every 12 common shares tendered. Ram shares were off four cents at $2.52 while Sierra shares jumped two cents to 20 cents.
