TSX closes up, BlackBerry plunges as Fairfax revises investment proposal

TORONTO – The Toronto stock market registered a minor gain Monday amid a huge plunge in BlackBerry (TSX:BB) shares after its largest shareholder said it won’t be taking the tech company private.

The S&P/TSX composite index rose 24.27 points to 13,361.73 led by gains in beaten-down mining stocks.

U.S. indexes also racked up small gains as traders hoped that a heavy slate of economic data coming out this week will offer some clues about when the Federal Reserve will start to wind up stimulus that has supported a strong rally on stock markets.

BlackBerry shares tumbled $1.34 or 16.56 per cent to $6.75, its lowest level since September 2012, after Fairfax Financial (TSX:FFH) said it will lead a group that will inject US$1 billion into the smartphone company. BlackBerry will stay as a public company.

“The fact that the share price is so depressed is really, again, a reflection of the fact there is very little confidence at this point in the story from the market in terms of BlackBerry’s ability to really turn things around in short order,” said Craig Fehr, a Canadian markets specialist at Edward Jones in St. Louis.

“It’s going to be more of a show-me story. BlackBerry is going to have to prove that their new strategy is viable.”

Fairfax had announced in late September that it would lead a consortium to pay US$9 per share for BlackBerry, a proposed deal that was subject to many conditions.

Under this new arrangement, Thorsten Heins will be replaced as BlackBerry CEO on an interim basis by John Chen, who will also be the chairman of the BlackBerry board.

The Canadian dollar rose 0.09 of a cent to 95.99 cents US.

New York’s Dow Jones industrials climbed 23.57 points to 15,639.12, the Nasdaq was up 14.55 points to 3,936.59 and the S&P 500 index added 6.29 points to 1,767.93.

The most important data of the week comes out Friday — October employment data for Canada and the U.S.

Economists looked for Canadian job creation to come in at a modest 10,000 with an uptick in the jobless rate from 6.9 per cent to seven per cent.

In the U.S., job creation is expected to come in at only 125,000 for October while the unemployment rate is forecast to rise 0.1 of a point to 7.3 per cent. Analysts say the numbers will be affected by the partial U.S. government shutdown of last month since the data would include private sector workers who were laid off.

“Without question, the headline number itself will be less critical because it is going to be distorted by the government shutdown to some degree,” added Fehr.

“But I think the broader trend is what the market is going to latch onto.”

On Thursday, the U.S. government will release the first look at third quarter economic growth. Gross domestic product was expected to rise by an annualized rate of 1.9 per cent, down from 2.5 per cent in the second quarter, partly because of the uncertainty caused by brinkmanship in Washington over extending the government’s borrowing limit.

On Tuesday, the Institute for Supply Management releases its latest snapshot of the American service sector, which is expected to show slightly slower expansion. The ISM index is expected to come in at 54, down from 54.4 in September.

The communique from last week’s meeting of the Federal Reserve left the impression that the central bank could decide to start winding up its $85 billion in monthly asset purchases as soon as December.

Gold stocks led TSX gainers as December bullion moved ahead $1.50 to US$1,314.70 an ounce. The gold index was up just over three per cent as Kinross Gold (TSX:K) moved up 24 cents to C$5.24 while Goldcorp (TSX:G) improved by 75 cents to $26.09.

The base metals sector also provided major support, ahead 1.17 per cent while December copper lost five cents to US$3.25 a pound. Lundin Mining (TSX:LUN) rose 17 cents to C$4.78 and Teck Resources (TSX:TCK.B) was up 37 cents to $28.57.

BlackBerry pushed the TSX tech sector down 2.3 per cent. But elsewhere in the sector, Celestica (TSX:CLS) rose 26 cents to $11.52.

December crude on the New York Mercantile Exchange gained a penny to US$94.62 a barrel and the energy sector was slightly lower.

Meanwhile, investors will take in plenty of earnings reports this week including WestJet (TSX:WJA) on Tuesday, pipeline company Enbridge (TSX:ENB) and auto parts giant Magna International (TSX:MGA) on Wednesday. Thursday is the heaviest day for earnings as traders will hear from Tim Hortons (TSX:THI), BCE (TSX:BCE), Canadian Tire (TSX:CTC.A), Canadian Natural Resources (TSX:CNQ) and insurance giants Sun Life Financial (TSX:SLF), Manulife Financial (TSX:MFC) and Great West Lifeco (TSX:GWO).

Note to readers: This is a corrected story. An earlier version incorrectly stated when BlackBerry shares had closed lower than $6.75