TSX surged amid easing of Syrian tensions, mega deals in telecoms, tech

TORONTO – The Toronto stock market got off to a strong start to September trading amid improved manufacturing data from China and fading chances of a military strike against Syria.

The S&P/TSX composite index ran ahead 123.13 points to 12,777.03.

Support also came from the telecom sector on Tuesday after U.S. telecom giant Verizon Communications Inc. said it was no longer interested in entering the Canadian wireless market. Verizon had announced Monday that it was paying US$130 billion for the 45 per cent stake in Verizon Wireless owned by British cellphone carrier Vodafone.

Rogers Communications (TSX:RCI.B) rose $2.79 or 6.71 per cent to $44.38, BCE Inc. (TSX:BCE) climbed $1.76 or 4.08 per cent to $44.95 and Telus Corp. (TSX:T) jumped $1.91 or 5.84 per cent to $34.60.

Techs also advanced after Microsoft Corp. announced it was buying Nokia Corp.’s lineup of smartphones and a portfolio of patents and services for US$7.2 billion. Buyout hopes for BlackBerry (TSX:BB) sent the smartphone maker’s stock up 21 cents to C$10.85.

The Canadian dollar was down 0.04 of a cent to 94.94 cents US as traders look to the Bank of Canada’s next interest rate announcement, scheduled for Wednesday.

The bank is widely expected to leave its key rate unchanged at one per cent, where it has been since September 2010. As usual, traders will look to any change in language in the accompanying statement that would change the consensus that the central bank won’t move on rates until late 2014.

U.S. indexes were also higher as traders weighed the chances of President Barack Obama getting congressional approval for punishing Syria for an alleged sarin gas attack outside Damascus on Aug. 21 that U.S. intelligence says killed 1,429 people, including more than 400 children.

A vote could come once Congress returns from its summer break, which is scheduled to end Sept. 9.

The Dow Jones industrials ran ahead 88.79 points to 14,899.1, the Nasdaq gained 38.27 points to 3,628.14 and the S&P 500 index was up 14.91 points at 1,647.88.

Strong U.S. economic data also supported North American markets as the latest reading on the U.S. manufacturing sector showed stronger than expected expansion in August. The Institute for Supply Management’s index rose to 55.7 from 53 in July, much stronger than the 54 reading that had been expected.

Microsoft is attempting to strengthen its fight with Apple Inc. and Google Inc. to capture a slice of the lucrative mobile computing market through the Nokia purchase.

The proposed price consists of €3.79 billion for the Nokia unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software. Another €1.65 billion will be paid for a 10-year licence to use Nokia’s patents, with the option to extend it indefinitely.

The deal came down a day after Verizon announced its deal with Vodafone. Verizon CEO Lowell McAdam also suggested in an interview with Bloomberg that speculation Verizon might try to compete in Canada was “way overblown.”

The spectre of competition in the Canadian wireless market from the big U.S. telco had pushed Canadian telecom stocks well off their 52-week highs over the last few of months.

On the commodity markets, copper prices ran ahead following two reports — both released Monday — that showed China’s manufacturing sector improved last month after prolonged weakness. China is the world’s biggest consumer of copper, which itself is an economic barometer as it is used in so many applications.

The HSBC purchasing managers’ index rose to 50.1 points in August, a level that indicates expansion as output and new orders edged up slightly and order backlogs rose at the fastest pace in two years. The official China Federation of Logistics and Purchasing PMI showed increasing expansion, rising to 51 from July’s 50, which was the highest level in 16 months.

December copper got extra lift from the strong U.S. manufacturing data and gained eight cents to US$3.31 a pound, sending the base metals sector up 2.6 per cent. Teck Resources (TSX:TCK.B) advanced 86 cents to C$27.38.

The energy sector gained 0.9 per cent as oil prices shed early losses after the release of the ISM data. The October crude contract on the New York Mercantile Exchange was up 74 cents to US$108.39 a barrel. Suncor Energy (TSX:SU) rose 57 cents to C$36.07.

Gold prices reversed early losses with the December contract climbing $4.10 to US$1,400.20 an ounce and the gold sector rose 1.2 per cent. Goldcorp Inc. (TSX:G) gained 54 cents to C$31.64.

Financials also provided lift as TD Bank (TSX:TD) ran up $1.15 to $90.77.

Jobs data will also weigh on markets this week.

Statistics Canada is expected to report Friday that the economy created about 30,000 jobs in August.

But markets are especially anxious to see how U.S. job creation fared in August. The consensus calls for the American economy to have cranked out about 180,000 jobs but recent data showing continuing declines in the numbers of people applying for jobless benefits have led some to think that number could be much higher.

In any event, traders hope the data will provide another clue as to whether the U.S. Federal Reserve will start to pare its monthly US$85 billion of bond purchases, which have kept long-term rates low and fuelled a strong rally on many stock markets.

European bourses slipped lower as London’s FTSE index moved down 0.23 per cent, Frankfurt’s DAX declined 0.19 per cent and the Paris CAC 40 dipped 0.1 per cent.

Earlier in Asia, Japan’s Nikkei 225 index jumped three per cent, South Korea’s Kospi rose 0.5 per cent, Australia’s S&P ASX/200 added 0.2 per cent and Hong Kong’s Hang Seng advanced one per cent.