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TSX Ends At Near 12-Week Low On Eurozone Concerns - Canadian Commentary

4/4/2012 4:40 PM ET

Canadian stocks ended at a near 12-week low Wednesday, led by a sharp declines in resource issues with renewed eurozone concerns after some weak bond auctions in Spain. Investors also mulled the significance of the Fed Reserve's policy meeting minutes yesterday, which had little to offer on any further monetary stimulus.

Meanwhile, European Central Bank President Mario Draghi indicated inflation as a risk to growth and its efforts with liquidity operations to stabilize the banking system, as temporary. Draghi stressed that eurozone governments should ensure sound structural reforms and fiscal positions, very crucial to economic growth.

Toronto's main index, the S&P/TSX, closed Wednesday at 12,178.66, down 144.95 points or 1.18 percent. The S&P/TSX Composite Index touched an intraday high of 12,310.26 and a low of 12,098.60.

The TSX Venture Index closed at 1,499.14, down 46.49 points or 3.01 percent. The index opened at 1,515.72 compared to its previous close of 1,545.63.

Almost all major components of the S&P/TSX Index were in in the red, led by resource stocks. The lone exception to the declines was the Telecommunications Index that moved up 0.44 percent.

The Diversified Metals & Mining Index plunged 2.11 percent with Osisko Mining Corporation (OSK.TO) dropping 5.81 percent, Teck Resources (TCK.B.TO) down 0.81 percent. and Lundin Mining Corp. (LUN.TO) down 5.36 percent. Eastern Platinum Limited (ELR.TO) shed 5.80 percent, while Alexis Minerals Corporation (AMC.TO) dropped 10 percent.

The Financial Index dropped 0.11 percent with Manulife Financial Corp. (MFC.TO) shedding 1.27 percent and Sun Life Financial Inc. (SLF.TO) losing 1.61 percent. Bank of Nova Scotia (BNS.TO) gained 0.11 percent, while TD Bank (TD.TO) shed 0.11 percent. Royal Bank of Canada (RY.TO) edged down 0.04 percent.

Smartphone maker Research In Motion (RIM.TO) shed 1.63 percent, while transportation systems maker Bombardier (BBD.B.TO) dropped 3.82 percent.

Data from the EIA showed US crude oil inventories surged by 9.00 million barrels, while gasoline stocks dipped 1.50 million barrels in the week ended March 30. Analysts expected crude oil inventories to gain 2.20 million barrels, while gasoline stocks are seen dipping 1.40 million barrels last week.

Light Sweet Crude Oil futures for May delivery, dropped $2.54 or 2.4 percent to close at $101.47 a barrel on the NYMEX Wednesday.

The Energy Index plunged 2.75 percent with Suncor Energy Inc. shedding 4.52 percent, and Imperial Oil Limited (IMO.TO) losing 1.88 percent. Talisman Energy Inc. (TLM.TO) shed 3.54 percent.

The Materials Index plummeted 2.71 percent, with Potash Corporation of Saskatchewan Inc. (POT.TO) dropping 0.92 percent and BlackPearl Resources Inc. (PXX.TO) shedding 5.54 percent. Uranium One Inc. (UUU.TO) gained 0.37 percent.

Gold for June delivery dropped $57.9 or 3.5 percent to close at $1,614.10 an ounce Wednesday on the NYMEX. The Global Gold Index shed 3.59 percent.

Among gold stocks, Lake Shore Gold Corp. (LSG.TO) dropped 3 percent, Kinross Gold Corp. (K.TO) was down 4.08 percent, and Goldcorp. (G.TO) shed 4.92 percent. Barrick Gold Corp. (ABX.TO) dropped 3.22 percent.

Gold and silver miner First Majestic Silver (FR.TO) shed 3.89 percent after it said it would acquire Silvermex Resources (SLX.TO) for about C$175.00 million or C$0.60 per share. The offer values Silvemex at approximately 33 percent premium to its latest closing price. Shares of Silvemex dipped 5.26 percent.

Development stage biotechnology company SemBioSys Genetics Inc (SBS.TO) plummeted over 84 percent after announcing that it has applied to the Toronto Stock Exchange to voluntarily delist the trading of its common shares from the stock exchange.

Meanwhile, software solutions provider 20-20 Technologies Inc. (TWT.TO) skyrocketed 23.72 percent even after posting lower first-quarter net earnings of $0.14 million or $0.01 per share compared with the prior year's $0.37 million or $0.02 per share. The company also announced that its Board of Directors has initiated a review of strategic and financial alternatives to enhance shareholder value.

In economic news from the U.S., the ADP said employment increased by 209,000 jobs in February following an upwardly revised increase of 230,000 jobs in February. Economists had expected an increase of about 208,000 jobs compared to the addition of 216,000 jobs originally reported for the previous month.

Elsewhere, the European Central Bank left its key interest rate unchanged at 0.25 percent for a fourth month in a row in April, as widely expected. The central bank had reduced the rate in November and December, reversing the two hikes undertaken earlier last year.

Euro zone retail sales declined in February, but at a slower-than-expected pace, data from Eurostat showed. Retail sales fell 0.1 percent month-on-month in February, following a 1.1 percent rise in January. Economists were expecting sales to dip 0.2 percent.

Meanwhile, Germany's factory orders grew 0.3 percent month-on-month in February, reversing January's 1.8 percent decline, the Federal Ministry of Economy and Technology showed. The expansion was much smaller than the 1.5 percent consensus forecast. On a yearly basis, industrial orders fell by adjusted 6.1 percent, following a 6 percent drop in the previous month. Economists were expecting 5.5 percent decrease.

by RTT Staff Writer

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