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TSX Ends 1% Lower On Data, Resource Stocks - Canadian Commentary

5/1/2013 4:53 PM ET

Canadian stocks plunged over 1 percent to end lower Wednesday, tracking declining global markets after some disappointing macroeconomic data from the U.S. and China, led mostly by resource stocks commodity prices dropped sharply. Investor sentiments dimmed over slowing global economic growth indicators after some soft manufacturing and private jobs data, although the Federal Reserves said it would continue the quantitative easing measures.

Investors worried over economic slowdown with activity in the U.S. manufacturing sector expanding at the slowest rate of the year in April, a report from the Institute for Supply Management showed. In another sign of a slowdown in the U.S. labor market, payroll processor Automatic Data Processing report showed private sector job growth to have slowed to a seven-month low in April. As well, spending on public construction in the U.S. showed a substantial drop in March, with an unexpected decrease in total construction spending.

Meanwhile, Chinese manufacturing activity expanded at a slower rate in April, as new orders and production growth eased, underpinning concerns that the recovery at the world's second largest economy still remained fragile.

The S&P/TSX Composite Index closed Wednesday at 12,321.29, down 135.21 points or 1.09 percent. The index touched an intraday high of 12,454.92 and a low of 12,285.10.

The Diversified Metals & Mining Index dropped 1.44 percent, with First Quantum Minerals Ltd. (FM.TO) down 2.50 percent, while Osisko Mining Corp. (OSK.TO) shedding 2.12 percent. Lundin Mining Corp. (LUN.TO) dropped 0.76 percent, while Teck Resources (TCK.B.TO) slipped 0.71 percent.

The Global Gold Index fell 2.36 percent, with gold futures for June delivery plunging $25.90 or 1.8 percent to close at $1,446.20 an ounce Wednesday on the Nymex.

The Capped Materials Index dropped 1.97 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) shedding 0.57 percent.

Among gold stocks, Yamana Gold Inc. (YRI.TO) plunged 6.50 percent, while Gold Corp. (G.TO) dropped 2.52 percent. Kinross Gold Corp. (K.TO) shed 1.64 percent, while Eldorado Gold Corp. (ELD.TO) plummeted 5.14 percent. Barrick Gold Corp. (ABX.TO) dropped 2.57 percent.

Earlier today, a weekly oil report from the Energy Information Administration showed U.S. crude oil inventories to have increased 6.70 million barrels for the week ended April 26, with gasoline stocks declining 1.80 million barrels. Analysts expected crude oil inventories to gain 1.4 million barrels and gasoline stocks to shed 0.90 million barrels last week.

The Energy Index dropped 2.03 percent, with U.S. crude oil futures for June delivery plunging $2.43 or 2.6 percent to close at $91.03 a barrel Wednesday on the Nymex.

Among energy stocks, Suncor Energy Inc. (SU.TO) dropped 2.67 percent, Canadian Natural Resources Limited (CNQ.TO) dropped 1.86 percent, and Husky Energy Inc. (HSE.TO) slipped 1.58 percent. Encana Corp. (ECA.TO) dropped 1.78 percent, while Canadian Oil Sands Limited (COS.TO) surrendered 1.41 percent.

Talisman Energy Inc. (TLM.TO) shed 4.80 percent after reporting a first-quarter net loss of $213 million or $0.21 per share from a profit of $291 million or $0.24 per share last year. Loss from operations was $0.06 per share compared to a profit of $0.16 per share last year. Analysts expected earnings of $0.02 per share for the quarter..

The Financial Index slipped 0.54 percent, with Bank of Montreal (BMO.TO) down 1.30 percent, TD Bank Group (TD.TO) down 0.56 percent, Royal Bank of Canada (RY.TO) gave up 0.38 percent, and Canadian Imperial Bank Of Commerce (CM.TO) surrendered 0.61 percent. Manulife Financial Corp. (MFC.TO) lost 0.87 percent, while Bank of Nova Scotia (BNS.TO) dropped 0.45 percent.

The Information Technology Index dropped 1.18 percent, with BlackBerry (BB.TO) slipping 3.70 percent.

The Capped Industrials Index surrendered 1.03 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) ending flat at $4.00.

In corporate news, Bell Aliant Inc. (BA.TO) gained 0.37 percent after reporting a profit of C$84 million for the first quarter, up C$1 million from a year ago. Earnings per share and adjusted earnings per share were C$0.36 and C$0.43 respectively, consistent with the first quarter of 2012.

Food retailer and financial service provider Loblaw Companies (L.TO) jumped 4.68 percent, after reporting a profit of C$171 million or basic net earnings per share of C$0.61, compared with C$122 million or C$0.43 per share a year ago. Earnings included a C$0.13 gain related to defined benefit plan amendments. Analysts anticipated earnings of C$0.47 per share for the quarter.

Canadian soft drinks maker Cott Corp. (BCB.TO) plunged 14.27 percent after reporting a profit of $1.0 million or $0.00 per share, compared to $6 million or $0.06 per share last year. Analysts anticipated earnings of $0.09 per share for the quarter.

Cameco Corp. (CCO.TO) shed 0.46 percent after reporting first-quarter net income attributable to equity holders of C$9 million or C$0.02 per share, down from C$129 million or C$0.33 per share last year. Adjusted net income per share was C$0.07, compared to C$0.31 prior year. Analysts expected earnings of C$0.08 per share for the quarter.

In Canadian news, manufacturing activity in the country expanded slightly in April, with the RBC Canadian Manufacturing Purchasing Managers' Index at 50.1, adjusted for seasonal variation, as compared to a reading of 49.3 in March. A reading above 50 indicates expansion, with below 50 showing contraction.

In economic news, activity in the U.S. manufacturing sector expanded at the slowest rate for the year in April, a report by the Institute for Supply Management showed Wednesday. The ISM purchasing managers index dropped to 50.7 in April from 51.3 in March, although a reading above 50 still indicates growth in the manufacturing sector. The drop has pulled the index down to its lowest level since December of 2012, although the reading indicates a fifth consecutive month of growth in the manufacturing sector.

In another sign of a slowdown by the U.S. labor market, payroll processor Automatic Data Processing, Inc. (ADP) released a report on Wednesday showing that private sector employment increased by much less than expected in the month of April. ADP said private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 131,000 jobs in March. Economists expected employment to increase by about 155,000 jobs compared to the addition of 158,000 jobs originally reported for the previous month.

With spending on public construction showing a substantial drop in March, a Commerce Department report on Wednesday showed an unexpected decrease in total construction spending for the month. Construction spending fell 1.7 percent to an annual rate of $856.7 billion in March from the revised February estimate of $871.2 billion. Economists expected spending to increase by 0.6 percent.

The Federal Reserve on Wednesday maintained its $85 billion per month asset purchase program, hoping to steer the U.S. economy through yet another rough patch. Lingering weakness in the jobs market has convinced most policy makers not to reduce the stimulus this year, even though some say the central bank has already done its share to assist the U.S. recovery.

Chinese manufacturing activity expanded at a slower rate in April, as new orders and production growth eased, underpinning concerns that the recovery at the world's second largest economy still remained fragile. The purchasing managers' index that measures the performance of the manufacturing sector, fell to 50.6 in April from 50.9 in March, a survey by China Federation of Logistics and Purchasing and the National Bureau of Statistics revealed Wednesday. Economists expected a slightly higher reading of 50.7. The PMI has now remained in the growth zone for seven consecutive months.

by RTT Staff Writer

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