Economy & Markets

U.S. markets finish mixed

By Linda Nguyen |
Source: The Canadian Press

The Toronto stock market eked out a moderate gain amid two major corporate deals by Valeant Pharmaceuticals and Gildan Activewear.

The S&P/TSX composite index was up by 37.33 points at 15,426.28, lifted by gains in the metals, materials and health-care stocks.

Valeant announced that it's selling parts of its business in two deals worth US$2.1 billion.

The Laval, Que.-based drug company says it will sell three skincare brands — CeraVe, AcneFree and AMBI — to Paris-based L'Oreal for US$1.3 billion in cash. It will also sell its interest in Dendreon Pharmaceuticals to a privately owned Chinese conglomerate, Sanpower Group, for US$819.9 million.

The news drove Valeant's share price up 7.54%, or $1.53, to $21.82, while the health-care sector gained 3% cent on the Toronto Stock Exchange.

In another big announcement, Gildan Activewear said it has won an auction to buy the bankrupt clothing company American Apparel for US$88 million.

The deal includes American Apparel's intellectual property rights and some manufacturing equipment from the L.A. facilities, but not the leases for the manufacturing or distribution centres or the company's retail stores. Gildan shares rose 1.53%, or 51¢, to close $33.94.

Scott Vali, vice president of equities and a portfolio manager at CIBC Global Asset Management, says that the focus of the market has shifted from monetary policy to hope for more fiscal stimulus.

Investors will be looking for signs in the coming weeks to see if the latest round of corporate earnings support the strong rally equity markets have seen since Donald Trump was elected U.S. president on Nov. 8.

Even if the earnings disappoint, investors will look to see what companies forecast for the future.

"We're watching to see if businesses start to invest. If we get that, globally, that's a positive for the economy," said Vali.

He added that there's particular interest in Trump's first news conference following the election and whether he will be hinting at any future plans. The presser is scheduled for Wednesday in New York.

Trump has said in the past that he plans on investing in infrastructure and loosening regulations in the banking and pharmaceutical industries.

"When he is in the presidential chair, the markets will also be watching to see what the initial policies are that will be announced, whether that be trade barriers or extra stimulus or other policies initiatives he talks about and follows through on," noted Vali.

In New York, the Dow Jones industrial average lost 31.85 points to 19,855.53 while the Nasdaq composite rose 20 points to 5,551.82. The S&P 500 was unchanged at 2,268.90.

In currencies, the Canadian dollar was nearly unchanged, up 0.01 of a U.S. cent to US75.60¢.

In commodities, the February crude contract slipped $1.14 to US$50.82 per barrel and February natural gas gained 18¢ to US$3.28 per mmBTU.

The February gold contract rose US60¢ to US$1,185.50 an ounce and March copper contracts were up US7¢ at US$2.61 a pound.