TSX to head lower amid mixed earnings from Royal Bank, TD and CIBC, Fed concerns - InfoNews

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TSX to head lower amid mixed earnings from Royal Bank, TD and CIBC, Fed concerns

The Toronto Stock Exchange Broadcast Centre is shown in Toronto on June 28, 2013.THE CANADIAN PRESS/Aaron Vincent Elkaim
December 05, 2013 - 5:27 AM

TORONTO - The Toronto stock market headed for a lower open Thursday amid a mixed bag of earnings from three of Canada's big banks while traders looked to U.S. jobs data that could provide a clue about when the Federal Reserve might start to cut back on key stimulus measures.

The Canadian dollar was up 0.14 of a cent to 93.79 cents US after sinking a quarter of a cent Wednesday to its lowest level since May 2010 after the Bank of Canada left rates unchanged. Its commentary left markets with the impression that rate hikes are still a long way off.

Toronto-Dominion Bank (TSX:TD) had $1.622 billion of net income in the fourth quarter, up from $1.597 billion a year ago. On an adjusted basis, TD earned $1.90 per share, up from $1.83 in the fourth quarter of 2012 but nine cents less than analysts had expected. TD also raised its dividend by a penny to to 86 cents a share and a two-for-one stock split effective early next month.

Most of TD’s major units showed increases but net income from wholesale banking fell by 61 per cent to $122 million from a year earlier, due to lower security gains and higher non-interest expenses.

Royal Bank of Canada (TSX:RY) had $2.119 billion of net income in its fiscal fourth quarter, an 11 per cent increase from last year. Adjusted diluted earnings per share was $1.42. Its main Canadian banking arm had $1.08 billion of net income, up five per cent from a year ago. Its capital markets and its investor and treasury units also had increases while profit at RBC Insurance was down and wealth management was flat. Its dividend remains unchanged.

RBC also announced that Gordon Nixon intends to retire effective Aug. 1, 2014, after 13 years as president and chief executive.

CIBC (TSX:CM) made $836 million in net income in its fiscal fourth quarter, down from $852 million in the same period last year. After adjusting for one-time items, earnings were $2.22 per share, seven cents ahead of estimates and up 8.8 per cent from a year ago. Revenue of $3.2 billion fell short of estimates of $3.26 billion.

CIBC says its results were impacted in part by a $39 million restructuring charge relating to FirstCaribbean International Bank and a $35 million impairment of an equity position tied to its U.S. leveraged finance portfolio. A dividend increase had been expected but its dividend was unchanged .

Traders will also look to Barrick Gold (TSX:ABX) a day after Peter Munk announced he will retire next year from the board of the world’s largest gold producer. Former Goldman Sachs executive John Thornton, who has shared the chairman’s duties with Munk since 2012, will be named chairman.

Munk’s departure is part of broad changes at the gold miner, including the hiring of a chief operating officer and the nomination of four new independent directors.

U.S. futures were generally weak a day before the release of the government's employment report for November. Expectations for job creation have moved higher after payroll firm ADP reported Wednesday that the private sector added 215,000 jobs last month. Prior to that report, markets had expected job creation of about 183,000.

A strong report would raise concerns that the Fed is getting close to cutting back on its US$85 billion of monthly bond purchases, a program that has kept long term rates low and supported a strong equity market rally this year.

The Dow Jones industrial futures dipped four points to 15,882, the Nasdaq futures gained seven points to 3,489.5 and the S&P 500 futures added 0.1 of a point to 1,791.9.

The TSX financial sector has been a drag so far this week following earnings from Bank of Montreal (TSX:BMO) and National Bank (TSX:NA). BMO beat earnings expectations but investors were disappointed with, among other things, weakness in its U.S. operations. National Bank also lost ground even as it met analyst forecasts and upped its dividend.

Still, the TSX financial sector started this week up more than 20 per cent year to date.

Scotiabank (TSX:BNS) posts earnings on Friday.

In other earnings news, Dollarama Inc. (TSX:DOL) says its third-quarter overall sales increased by 14.2 per cent to $522.9 million while comparable-store sales were up 4.8 per cent. Net income was $61.7 million, up from $51.48 million a year earlier, while diluted earnings per share for the Montreal-based discount retail chain rose to 87 cents per share from 68 cents.

On the commodity markets, oil prices advanced for a second day after day showed a much larger than expected drawdown of U.S. supplies last week. The January crude contract on the New York Mercantile Exchange gained 16 cents to US$97.36 a barrel.

Metals were lower as March copper declined two cents to US$3.23 after the American jobs data, along strong housing and trade reports, helped push the metal up eight cents on Thursday.

December bullion fell $17.40 to US$1,229.80.

European bourses were little changed with London's FTSE 100 index up 0.01 per cent, Frankfurt's DAX added 0.06 per cent while the Paris CAC 40 rose 0.12 per cent.

Earlier in Asia, Japan's Nikkei 225 dropped 1.5 per cent, China's Shanghai Composite fell 0.2 per cent, Hong Kong's Hang Seng was down 0.1 per cent and South Korea's Kospi eased 0.1 per cent. Benchmarks in Singapore, Indonesia and Australia also fell.

News from © The Canadian Press, 2013
The Canadian Press

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