TSX up on positive U.S. retail sales, higher oil prices amid concern over Iraq
TORONTO - The Toronto stock market closed higher Thursday amid unfolding conflict in Iraq that pushed up energy prices and positive economic data from the United States.
The S&P/TSX composite index added 17.50 points to 14,909.63. The Canadian dollar gained 0.10 of a cent to 92.12 cents US.
In the U.S., the Dow Jones industrials dropped 109.69 points to 16,734.19, the Nasdaq fell 32.99 points to 4,298.94 and the S&P 500 dipped 12.03 points to 1,931.86.
Oil prices rose after an al Qaida-inspired group that captured two key cities in Iraq last week vowed to also invade Baghdad.
One of those two cities, Mosul, lies in an area that is a major gateway for Iraqi oil. The uncertainty over oil supplies prompted the July crude contract on the New York Mercantile Exchange to jump $2.13 to US$106.53 a barrel.
Portfolio manager Kash Pashootan said there is little evidence that demand for oil, particularly from China and the U.S., will rise in the medium to long term, but any kind of international conflict will raise prices.
"The market will try to trick us with rising oil prices," said Pashootan, a vice-president at First Avenue Advisory in Ottawa, a Raymond James company.
"But if you look at examples from earlier this year, the major driver for energy prices has been the same factor â€” geopolitical tension."
The energy sector climbed 1.69 per cent on the Toronto Stock Exchange. However, gold was the leading advancer, up by 2.73 per cent, as bullion gained $12.80 to US$1,274 an ounce. July copper declined three cents to US$3.02 a pound.
Meanwhile, there were more signs of economic improvement in the U.S., as the Commerce Department reported retail sales rose for a fourth consecutive month in May â€” up 0.3 per cent amid a surge in demand for autos.
However sales fell shy of the 0.4 per cent increase that economists had expected.
Also, the U.S. Labor Department says weekly applications for unemployment benefits rose 4,000 to a seasonally adjusted 317,000.
In Canada, the central bank issued a warning about the country's housing market and the high levels of consumer debt.
In its latest semi-annual review, the Bank of Canada said the housing market is showing signs of a soft landing, but it still remains the biggest domestic risk.
The comments come as Statistics Canada reported that its new housing price index rose 0.2 per cent in April, following identical increases in both February and March. Meanwhile, the Teranetâ€“National Bank National composite house price index said Canadian home prices were up in May, rising 0.8 per cent over the previous month.
On the corporate front, shares of Lululemon Athletica Inc. (NASDAQ:LULU) were hammered after it reported a lower first-quarter profit of $18.98 million and cut its outlook for the year. Shares in the company fell nearly than 16 per cent, or $7.05 to close at US$37.25 in New York despite the company announcing it plans on buying back up to US$450 million of its shares.
Follow @LindaNguyenTO on Twitter.
Note to readers: This is a corrected story: A previous version incorrectly said the market closed lower. It also incorrectly pegged the Dow close at 16,752.05
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