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TSX Ends Lower On Eurozone, China Data -- Canadian Commentary

5/11/2012 4:42 PM ET

Canadian stocks once again closed in the red Friday, on lingering eurozone worries over Greece's political uncertainties and China data that showed industrial production to have grown the least since 2009 in April. China's retail sales growth slowed to its weakest in over a year also weighed on trader sentiment. The $2 billion trading loss by American banking giant JPMorgan Chase & Co. also pressured stock prices.

The downturn was led by resource stocks, with investors largely ignoring some upbeat jobs data from Canada, which showed the nation added much more jobs than expected in the month of April. The TSX closed in the red for a seventh time in eight days, shedding over 1 percent for the week.

Toronto's main index, the S&P/TSX, closed Friday at 11,694.67, down 41.50 points or 0.35 percent. The S&P/TSX Composite Index touched an intraday high of 11,795.66 and a low of 11,646.37.

The TSX Venture Index closed at 1,345.58, down 9.73 points or 0.72 percent. The index opened at 1,347.16 compared to its previous close of 1,355.31.

Almost all major components of the S&P/TSX Index were in the red once again, led by the Energy and Mining Indices.

The Metals & Mining Index dropped 1.04 percent with Teck Resources Limited (TCK.B.TO) down 1.29 percent and Lundin Mining Corp. (LUN.TO) shedding 1.18 percent. First Quantum Minerals Ltd. (FM.TO) edged down 0.05 percent, while Inmet Mining Corp. (IMN.TO) gained 2.77 percent.

Crude oil slipped to a near 5-month low Friday amid lingering demand growth concerns with worries about China growth. China, the second biggest energy consuming nation in the world, returned data that showed its industrial production grew the least since 2009 in April, while retail sales growth slowed to the weakest in 14 months.

Crude Oil futures for June delivery, dropped $0.95 or 1.0 percent to close at $96.13 a barrel on the NYMEX Friday.

The Energy Index shed 1.01 percent with Suncor Energy (SU.TO) dropping 1.71 percent and Canadian Natural Resources Limited (CNQ.TO) losing 0.29 percent. Encana Corp (ECA.TO) shed 2.07 percent, while Talisman Energy Inc. (TLM) shed 3.63 percent.

Baytex Energy Corp. (BTE.TO) was up 3.24 percent, while Tourmaline Oil (TOU.TO) gained 2.62 percent.

Heavyweights transportation systems maker Bombardier Inc. (BBD.B.TO) shed 4.04 percent, while Blackberry smartphone maker Research In Motion Limited (RIM) edged down 0.08 percent.

The Financial Index gained 0.38 percent with Sun Life Financial Inc. (SLF.TO) adding 3.33 percent and Manulife Financial Corp. (MFC.TO) adding 1.31 percent. Royal Bank of Canada (RY.TO) inched up 0.09 percent, while Toronto-Dominion Bank (TD.TO) moved up 0.32 percent. Bank of Nova Scotia (BNS.TO) gained 0.11 percent.

Gold stocks traded weak amid falling bullion prices. Gold futures for June delivery shed $11.50 or 0.7 percent to close at $1,584.00 an ounce Friday on the NYMEX.

The Global Gold Index shed 2.01 percent. Among gold stocks, B2Gold Corp. (BTO.TO) gained 0.63 percent, while Eldorado Gold Corp. (ELD.TO) fell 3.47 percent. Kinross Gold Corp. (K.TO) edged down 0.13 percent, while Barrick Gold Corp. (ABX.TO) lost 1.75 percent.

Agnico-Eagle Mines (AEM.TO) shed 2.41 percent and Detour Gold (DGC.TO) was down 4.35 percent.

The Materials Index fell 1.46 percent with Mercator Minerals Ltd. (ML.TO) down 5.88 percent and Uranium One Inc. (UUU.TO) down 2.22 percent.

Canadian stock market operator TMX Group Inc. (X.TO) slipped a modest 0.06 percent after reporting a lower first-quarter profit of C$56.8 million or C$0.76 per share, with adjusted earnings of C$0.76 per share. Analysts expected earnings of C$0.88 per share.

Oil and gas company Enerplus Corp. (ERF.TO) was down 4.75 percent after slipping to a first-quarter loss of C$33.82 million or C$0.18 per share, as compared to a profit last year.

In economic news, Statistics Canada said the economy generated 58,000 jobs in April, mostly in full-time work. However, with more people searching for work, the unemployment rate increased by 0.1 percentage points to 7.3 percent. Compared with 12 months earlier, employment was up 1.2 percent or 214,000.

Consumer sentiment in the U.S. unexpectedly witnessed improvement in May, a report by Reuters and the University of Michigan indicated Friday, The consumer sentiment index jumped to a four-year high, with the index for May rising to 77.8 from the final April reading of 76.4. Economists expected the index to edge down to 76.2.

The Chinese economy expanded at the weakest pace in nearly three years in the first quarter of 2012. Official data released Thursday pointed to a notable slowdown in China's exports and imports.

Separately, the statistical office reported Friday that the producer price index dropped for a second consecutive month in April, falling 0.7 percent year-on-year compared to forecast for a 0.5 percent fall. This followed a 0.3 percent decline in March.

In other economic news, the U.S. Labor Department said producer price index fell by 0.2 percent in April after coming in unchanged in March. Economists expected the index to remain flat for a second straight month. Excluding the sharp drop in energy prices as well as a modest increase in food prices, the core producer price index edged up by 0.2 percent in April. The modest increase in core prices, which compares to a 0.3 percent increase in the previous month, came in line with the expectations of economists.

From the eurozone, Germany's EU harmonized consumer prices increased as estimated earlier in April, final data released by the Federal Statistical Office showed. The harmonized index of consumer prices (HICP) increased 2.2 percent on an annual basis in April, in line with preliminary estimates. In March, EU harmonized consumer prices advanced 2.3 percent annually.

Meanwhile, the European Commission in its spring forecast published today said the eurozone has entered a technical recession, but recovery is in sight.

by RTT Staff Writer

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