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Canadian Stocks Are Struggling As Commodities Weaken - Canadian Commentary

The Canadian stock market opened slightly higher Monday morning, but has since pared its early gains. The market is struggling at the start of the week due to the pullback in commodity prices. Commodities are weakening due to a rise in the value of the U.S. dollar, following the Senate's passage of the tax reform bill.

Markets in Europe are climbing Monday after the U.S. Senate approved a bill to overhaul the tax system over the weekend. The Senate voted 51 to 49 in favor of the bill known as the Tax Cuts and Jobs Act, with the vote largely coming down along party lines.

However, markets on Wall Street are turning in a mixed performance this morning. The Dow Jones Industrial and the S&P 500 index are rising in early trade Monday, while the Nasdaq has slipped into negative territory.

The benchmark S&P/TSX Composite Index is up 15.04 points or 0.09 percent at 16,054.01.

On Friday, the index closed down 28.51 points or 0.18 percent, at 16,038.97. The index scaled an intraday high of 16,102.81 and a low of 15,963.02.

The Capped Information Technology Index is losing 1.39 percent. BlackBerry (BB.TO) is falling 0.73 percent and Descartes Systems Group (DSG.TO) is surrendering 2.19 percent. Constellation Software (CSU.TO) is declining 1.61 percent.

The Gold Index is decreasing 1.14 percent. Gold prices are falling Monday morning as stocks rally after U.S. tax reform cleared a significant hurdle.

IAMGOLD (IMG.TO) is falling 1.32 percent and Goldcorp (G.TO) is weakening by 0.68 percent. Kinross Gold (K.TO) is declining 2.12 percent and Eldorado Gold (ELD.TO) is surrendering 1.36 percent and Barrick Gold (ABX.TO) is losing 1.29 percent.

The Energy Index is falling 1.00 percent. Crude oil prices are falling Monday morning as the dollar strengthened on the abrupt passage of US tax reform.

Suncor Energy (SU.TO) is declining 1.73 percent and Encana (ECA.TO) is weakening by 0.52 percent. Crescent Point Energy (CPG.TO) is decreasing 1.15 percent and Cenovus Energy (CVE.TO) is losing 0.70 percent. Canadian Natural Resources (CNQ.TO) is down 0.80 percent and Imperial Oil (IMO.TO) is lower by 0.25 percent.

Husky Energy (HSE.TO) is forfeiting 0.83 percent. The company said it is on track to exceed the 2018 targets for funds from operations and free cash flow outlined at its 2017 Investor Day.

The company expects funds from operations for 2018 to exceed $4 billion and free cash flow to be about $1 billion at pricing of $55 WTI, $2.50 AECO and a $15 per barrel Chicago 3:2:1 crack spread.

The Capped Materials Index is down 0.64 percent. Agnico Eagle Mines (AEM.TO) is decreasing 1.19 percent and Franco-Nevada (FNV.TO) is falling 0.13 percent. Agrium (AGU.TO) is lower by 1.94 percent and Postash Corp. of Saskatchewan (POT.TO) is dropping 1.93 percent.

The Capped Industrials Index is up 0.81 percent. Canadian National Railway (CNR.TO) is higher by 1.44 percent and Canadian Pacific Railway (CP.TO) is adding 0.16 percent. Finning International (FTT.TO) is climbing 1.80 percent and WestJet Airlines (WJA.TO) is rising 1.67 percent. Air Canada (AC.TO) is increasing 1.64 percent.

Bombardier (BBD-B.TO) is advancing 0.32 percent. Bombardier Aerostructures and Engineering Services says it has been chosen by Airbus as a supplier on a new engine nacelle program.

The company's operations in Northern Ireland will develop and manufacture a new thrust reverser for the Pratt & Whitney powered A320neo family of aircraft.

The Capped Healthcare Index is higher by 0.50 percent. Valeant Pharmaceuticals International (VRX.TO) is rising 1.00 percent and Extendicare (EXE.TO) is gaining 0.54 percent.

The heavyweight Financial Index is increasing 0.48 percent. Royal Bank of Canada (RY.TO) is gaining 0.66 percent and Bank of Montreal (BMO.TO) is up 0.53 percent. Toronto-Dominion Bank (TD.TO) is rising 0.58 percent and Canadian Imperial Bank of Commerce (CM.TO) is climbing 0.42 percent. National Bank of Canada (NA.TO) advancing 0.52 percent.

The Capped Telecommunication Services Index is up 0.20 percent. TELUS (T.TO) is rising 0.65 percent.

On the economic front, Eurozone investor confidence declined in December on weak expectations, survey results from think tank Sentix showed Monday. The investor sentiment index fell more-than-expected to 31.1 from 34.0 in November. The score was forecast to fall to 33.6.

Eurozone producer price inflation eased at a faster-than-expected pace in October, data from Eurostat showed Monday.

Producer prices climbed 2.5 percent year-over-year in October, slower than previous month's 2.8 percent rise, which was revised down from a 2.9 percent increase reported earlier. Economists had expected the PPI inflation to moderate to 2.6 percent.

British construction activity expanded at the fastest pace in five months in November, driven by solid rise in residential building work, survey data from IHS Markit showed Monday. The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 53.1 in November from 50.8 in October.

A report released by the Commerce Department on Monday showed a modest decrease in new orders for U.S. manufactured goods in the month of October. The report said factory orders edged down by 0.1 percent in October after surging up by 1.7 percent in September. Economists had expected orders to drop by 0.4 percent.

In commodities, crude oil futures for January delivery are down 0.78 or 1.34 percent at $57.58 a barrel.

Natural gas for January is down 0.046 or 1.50 percent at $3.015 per million btu.

Gold futures for February are down 5.30 or 0.41 percent at $1,277.00 an ounce.

Silver for March is down 0.053 or 0.32 percent at $16.335 an ounce.

by RTTNews Staff Writer

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