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TSX Dives On Global Growth Worries - Canadian Commentary


Canadian stocks were extending losses for a fourth straight session Thursday morning as worries about the U.S. fiscal cliff continued to depress trader sentiment. Meanwhile, commodities were moving lower on concerns over weak economic growth in the euro area and anxiety after the leadership transition in China. Downbeat macroeconomic data out of the US also weighed.

Despite expansions in Germany and France, the euro area officially slipped into a recession in the third quarter as governments across member nations unfold tough austerity measures in the face of widespread protests.

The S&P/TSX Composite Index surrendered 86.41 points or 0.72 percent to 11,843.39, after losing nearly 400 points or over 3 percent in the past three sessions.

Oil and gas industry services provider Poseidon Concepts Corp. (PSN.TO) dived over 50 percent after reporting a much lower net third quarter income of $7.8 million or $0.10 per share compared to $14.30 million or $0.22 per share in the year ago quarter.

The Diversified Materials Index lost nearly 2 percent, with Inmet Mining (IMN.TO) and First Quantum Minerals (FM.TO) surrendering nearly 3 percent each. Teck Resources (TCK_B.TO) was down 1 percent.

The price of gold was moving lower Thursday morning as the US dollar was steady versus a basket of currencies amid inflation data. According to a release from the World Gold Council demand for gold dipped 11 percent year-over-year to 1,084.6 tons, worth $57.60 billion, in the third quarter of 2012 . However on a sequential basis, demand was up 10 percent in third quarter. Gold for December shed $17.70 to $1,712.40 an ounce.

Among gold plays, Seabridge Gold (SEA.TO) was down 5 percent and Royal Gold (RGL.TO) lost over 3 percent.
Allied Nevada Gold (ANV.TO) and Agnico-Eagle Mines (AEM.TO) were down around 2 percent each.

Automotive products company Linamar Corp. (LNR.TO)shed nearly 2 percent even after reporting improved third-quarter net earnings of C$33.7 million or C$0.52 per share compared to C$21.5 million or C$0.33 per share in the same quarter last year. Adjusted net earnings were C$33.7 million or C$0.52 per share, up from C$25.1 million or C$0.39 per share. Analysts expected the company to report earnings of C$0.50 per share for the quarter.

Energy stocks were trading mixed amid firm energy prices, with traders awaiting cues from the official inventories data from the EIA, due out later today. Analysts expect crude oil inventories to jump 1.50 million barrels last week. Crude for December edged down $0.26 to $86.506 a barrel.

Nexen Inc. (NXY.TO) rose over 3 percent, while Niko Resources (NKO.TO) was losing nearly 3 percent.

Meanwhile, audio entertainment and broadcasting company Canadian Satellite Radio Holdings Inc. (XSR.TO) gained 3 percent after reporting fourth-quarter profit of C$6.12 million, up from C$3.5 million a year ago.

In economic news Statistics Canada said manufacturing sales advanced 0.4 percent to $49.8 billion in September, mainly on higher production in the aerospace product and parts industry and increased sales of primary metals. Excluding the aerospace industry, total manufacturing sales decreased 0.7 percent. The increases were partly offset by a decline in the motor vehicle assembly industry.

From the U.S, the Labor Department said its consumer price index edged up by 0.1 percent in October after rising by 0.6 percent in each of the two previous months. The modest price increase came in line with the expectations of economists. Excluding food and energy prices, the core consumer price index rose by 0.2 percent in October after inching up by 0.1 percent in September. The core price growth also matched estimates.

A separate report from the Labor Department showed that jobless claims jumped to 439,000, an increase of 78,000 from the previous week's revised figure of 361,000. Economists had expected jobless claims to climb to 376,000 from the 355,000 originally reported for the previous week.

Elsewhere, the euro area entered a recession in the third quarter, flash estimates published by Eurostat revealed. Gross domestic product slid 0.1 percent from a quarter ago, when it dropped 0.2 percent. The rate of decline matched economists' expectations.

A separate release by Eurostat revealed inflation in the euro area weakened in October as estimated earlier. The harmonized index of consumer prices (HICP), measured under the EU methodology, increased 2.5 percent year-on-year in October, in line with the preliminary estimates. In September, the rate of inflation was 2.6 percent.

Meanwhile, the German economy expanded for the third straight quarter and at a faster than expected pace, preliminary data from the Federal Statistical Office showed. The gross domestic product gained 0.2 percent sequentially in the third quarter, but slightly slower than the 0.3 percent rise in the second quarter. Economists had forecast a 0.1 percent expansion.

by RTTNews Staff Writer

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