The Canadian Press - ONLINE EDITION

Traders look for direction, TSX snaps winning streak, earnings season winds up

  • Print

The Toronto stock market could be in for more choppy action this week as the first-quarter earnings season winds down and investors consider what has made the TSX one of the top market performers in early 2014 and whether those reasons are still valid.

It is also a relatively light week for market-moving economic data.

The Toronto market had a negative week last week after three weeks of gains that pushed the TSX up about 8.4 per cent year to date and within about 300 points of its all-time high from the summer of 2008.

But cracks started to appear last week and the TSX fell 1.57 per cent, still leaving it up 6.7 per cent year to date while the Dow industrials had gained just 0.43 per cent.

It is also a gain that many analysts thought the TSX would register for the whole year.

Bob Gorman, chief portfolio strategist at TD Waterhouse, didn’t think the decline last week had much to do with the recent slew of earnings reports, pronouncing them by and large "pretty solid".

Rather, it is that some of the sectors that sustained the biggest declines last year have staged impressive comebacks for good reasons and it's hard to see what can drive those components higher.

For example, the TSX Global Gold sector is the biggest percentage gainer this year, up about 14.5 per cent and Gorman believes the sector is vulnerable right now.

He noted that gold has done fairly well so far this year, in part because the U.S. dollar index has been off, reflecting a stronger euro that has benefited in part from capital flows out of Russia in response to its stance in the Ukraine crisis.

"But if, as seems probable, at some stage you do get the U.S. interest rates starting to creep up — they will likely move before European rates — that interest rate differential will probably start to move the U.S. dollar higher," he said.

"Gold is denominated in U.S. dollars, the U.S. dollar goes up, gold typically comes under pressure so I would be a little skeptical about the golds hanging on to all of their early gains."

Energy has been the other big winner and the sector is still up about 13 per cent so far this year.

Gorman noted that the price of heavy oil produced in the Alberta oilsands improved after a major BP refinery in Indiana came back online following refurbishment.

"This refinery took a lot of that heavy oil and, (when) they weren't in a position to take it, you didn't have the demand and the price went down," he said.

"It is up again and, in fact, they have increased capacity now to take heavy oil so the supply demand balance is much better than it was. The price has gone back up so the discount, which at one point was 50 per cent . . . is now back to historical averages in the upper teens or so."

Gorman said the sector will still likely benefit from solid earnings reports during the year, but with it already up about 13 per cent "a certain amount of this is baked in."

He still sees the TSX ending 2014 with a gain in the high single digits.

"(But) I don’t think the numbers we generated year to date are going to be repeated," he said.

"Maybe it does better than we forecast. Given the very strong early start it’s certainly possible, but it’s not our base case."

On the economic calendar, investors will be looking to see the latest reading on existing home sales. Economists expect that sales were up two per cent year over year in April while prices gained six per cent.

And in the U.S., traders expect that April retail sales will show a 0.3 per cent rise after gaining 1.2 per cent in March.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Stuart Murray announces musical RightsFest for CMHR opening weekend

View more like this

Photo Store Gallery

  • Winnipeg’s best friend the dragon fly takes a break at English Gardens in Assiniboine Park Wednesday- A dragon fly can eat  food equal to its own weight in 30 minutes-Standup photo- June 13, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • A goose flys defensively to protect their young Wednesday near Kenaston Blvd and Waverley -See Bryksa 30 Day goose challenge- Day 16 - May 23, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos


Should confessions extracted through Mr. Big police stings be admissible in court?

View Results

View Related Story

Ads by Google