Promising prospects
TORONTO (Reuters) — The torrent of Canadian quarterly profit reports over the next few weeks is expected to top estimates, which should help the Toronto stock market keep building on its recent streak of record highs.The Toronto Stock Exchange’s main index has been on a tear in the past month, hitting record highs this past week that look likely to be toppled in coming weeks as Canada’s biggest companies unveil their results.
The S&P/TSX composite index , which has rallied 3.8 percent in the past month, finished the week ahead 0.6 percent, at 13,664.71. Its record high is 13,713.14, hit on April 18.
A good indicator of the market’s prospects is that U.S. corporate earnings released over the past few weeks have been rolling in ahead of Wall Street estimates.
“Just following what’s going on in the US it seems most companies are beating expectations and if we follow suit, which we probably will, then the earnings should be good to slightly better,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.
“We’re going to go higher, but I think it’s going to be a bit of a roller-coaster ride, and what I mean by that is if we get quick gains it’s going to vulnerable to setbacks.”
The key driver of market gains likely will be the heavily weighted financial group, home to Canadian banks and insurance companies.
The insurers start reporting the first week of May, led off by Sun Life Financial Inc. Canada’s big banks follow toward the end of May.
Royal Bank of Canada , Canada’s biggest, is expected to report a profit of 99 Canadian cents a share, according to Reuters Estimates. That would top its year-before profit of 85 Canadian cents a share.
Toronto-Dominion Bank is expected to deliver a profit of C$1.27 a share, which would blow past the year-earlier profit of C$1.09 per share when stripping out items.
The bulk of big-name companies reporting in the coming week are in the energy sector, and they could have a hard time impressing the market since oil prices in the first quarter were down 8 percent from the year-before quarter.
