The main Canadian index continued its modestly upward momentum Tuesday after existing home sales in the U.S. reached the highest level in three years in November.
The S&P/TSX Composite index recovered from a 30-point dip early in the session, rising through the trading day to close at 11,627.98, up 73.26, or 0.6 per cent. Bank stocks led the way, with the S&P/TSX financials climbing nearly a full percentage point, reflecting hopes for stable U.S. home prices and lower mortgage loan losses. Shares of Bank of Montreal added 83 cents, or 1.5 per cent, to $55, their highest level since February 2008. The Royal Bank rose 76 cents, or 1.3 per cent, to $56.55. Property and casualty insurer Fairfax Financial, parent of Vancouver-based Commonwealth Insurance climbed $8.35, or 2.2 per cent, to $392.39.
On Wall Street, mortgage insurers soared, after the U.S. Federal Housing Finance Agency in Washington reported that house prices fell just 1.9 per cent on a year-over-year basis in October, while the supply of unsold homes fell to 6.5 months in November, the lowest level in nearly three year.
MGIC Investment Corp. shot up $1.26, or 25 per cent, to $6.36 US, while Radian Group gained $1.66, or 26 per cent, to $8.12, PMI Group jumped 43 cents, or 21 per cent, to $2.46 US, and MBIA gained 67 cents, or 18 per cent, to $4.31 US. Traders worried briefly that bank foreclosure agents had come to reclaim the New York Stock Exchange, as a caped, helmeted and armoured Darth Vader strode onto the gallery above the trading floor at the open, flanked by heavily armed Imperial stormtroopers. It turned out that the Dark Lord was there to ring the opening bell, celebrating 30 years of commercial success for Lucasfilm's Star Wars franchise.
Lululemon Athletica, the Vancouver-based Jedi master of guerrilla marketing, rose $1.76, or 5.9 per cent, to $31.84, its highest level since June 2008. The yoga wear retailer reaped a raft of publicity with its latest advertising blitz, celebrating a forthcoming “really cool athletic event in British Columbia between 2009 and 2011.” Whatever Lulu is referring to, the company has not forked over vast sums of shareholder cash in exchange for sponsorship rights to any athletic extravaganzas in B.C. or elsewhere.
Vancouver-based Westport Innovations rose 72 cents, or 5.9 per cent to $13.00. Kenworth announced two more of its heavy-duty truck models will be equipped with Westport's fuel-efficient natural gas engines.
Gold bullion softened its downward trajectory but continued lower, with the February contract shedding $9.30 to settle at $1,086.70 US as the bullish housing report pushed the U.S. dollar higher against other currencies. Shares of Vancouver-based Novagold rose 40 cents, or seven per cent, to $6.02, after the gold exploration company agreed to buy Alaska's Ambler copper-zinc project from Kennecott Arctic for $29 million US. Kennecott, a division of mining giant Rio Tinto, will get $5 million US in Novagold stock, and two annual payments of $12 million US beginning one year after the deal closes.
Gregory Thomas is a Financial Advisor and Certified Financial Planner with Raymond James Ltd. www.gregorythomas.ca Tel. 604-663-4235 gregory.thomas@raymondjames.ca The views expressed do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd. is a member of CIPF.
