Energy helps lift TSX; US markets muted ahead of Fed, earnings

Canada’s benchmark stock index got a lift Monday as strength in energy and financial stocks offset weakness in the resource-heavy materials and technology sectors.

The S&P/TSX Composite Index closed 121.56 points higher, or 0.64 per cent, to 19.104.48, with Nutrien Ltd., Enbridge Inc. and Canadian Natural Resources Ltd. putting the most points on the tape.

GCM Mining Corp., which is not included in the composite index, was a standout percentage gainer on the Toronto Stock Exchange after it announced a friendly all-stock deal to acquire Aris Gold Corp. The companies said their transaction will create the largest gold company in Colombia. GCM shares closed higher by 9.71 per cent to $3.73 on Monday.

“The stock market likes the deal, and the shareholders we’ve spoken to like the deal, so we’re not anticipating any problems with getting the votes on both sides,” Ian Telfer, chairman of Aris Gold Corporation, said in an interview .

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Gold industry veteran Ian Telfer, who becomes chairman of the merged company after GMC Mining and Aris Gold combine, says Aris’s big Soto Norte project in Colombia is a rare, attractive large-scale deposit

US markets struggled to find direction and ended mixed. The Dow gained 0.28 per cent, the S&P 500 rose just 0.13 per cent and the Nasdaq fell 0.43 per cent.

It’s a busy week for investors as they await a slew of earnings from several blue chip companies, an interest rate decision from the US Federal Reserve and key economic data.

“The market will react swiftly,” said Martin Pelletier, senior portfolio manager at Wellington-Altus Private Counsel, in an interview Monday.

He said the US Fed could opt for a three-quarter-point hike, instead of a full-point increase like the Bank of Canada, because of the recent strength of the US dollar. However, the Fed’s language on the future pace of rate hikes could move certain segments of the market, he added.

“Then you also have inflationary data coming out of the US, GDP data that could also drive expectations for future monetary policy, and then corporate earnings. I actually think there could be the potential to surprise to the upside. So far, of the public companies that have reported, 75 per cent have beat expectations and so that could be something to watch for as well,” he said.

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Martin Pelletier, senior portfolio manager at Wellington-Altus Private Counsel, joins BNN Bloomberg to discuss why he is not concerned about a recession and sees more upside for equities ahead.

After the close of trading Monday, Walmart Inc. announced it expects operating income will decline 13 to 14 per cent in the second quarter and 11 to 13 per cent for the full year. The company said higher food and gasoline prices were affecting consumer spending patterns and it resorting to discounting general merchandise, particularly clothing, to move inventory.

Walmart shares fell eight per cent immediately in extended trading after the company announced the news.

Meanwhile, the September contract for US benchmark West Texas Intermediate crude settled US$2.00 higher at US$96.70 per barrel.

The Canadian dollar rose to 77.82 cents US, a gain of 0.6 per cent.

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