TSX choppy ahead of Fed decision, gold prices retreat
The TSX is chopp Wednesday afternoon, ahead of the U.S. Federal Reserve decision expected at 2 p.m. ET today.
Toronto’s main market was hovering around breakeven Wednesday afternoon as gold stocks lost some ground and amid trepidation among investors as they await a statement from the U.S. Federal Reserve later in the day.
Traders have been cautious as they focus on the meeting, which is expected to include news of monetary stimulus to help a slumping U.S. economy. The meeting began Tuesday, with an announcement expected later this afternoon.
Also high on the minds of investors is the Thursday meeting at the European Central Bank, when its Governing Council meets in Frankfurt. Hopes are that the ECB will announce some form of new action, after ECB president Mario Draghi said last week that the institution will do "whatever it takes" to preserve the euro.
Back in Toronto, as at 12:50 pm ET, the S&P/TSX Composite was flat at 11,664.38, while the more junior S&P/TSX Venture Composite lost 1.83 points, or 0.15% to 1,181.25.
Most sectors were volatile Wednesday, with metals and mining, materials and financials lately down, while energy, heath care and info tech were showing modest gains.
Gold for December delivery slipped $9.10 to $1,605.50 an ounce, while silver futures lost 70 cents to $27.21 an ounce.
Crude for September rose 76 cents to $88.82 a barrel, while the base metal copper contract was down 5 cents to $3.37 a pound.
Gold giant Kinross Gold (TSE:K) fell sharply losing almost 4%, while Goldcorp (TSE:G) lost 3.29% and Barrick Gold (TSE:ABX) shed 1.48%.
Elsewhere in mining, IAMGOLD (TSE:IMG) slumped over 3%, while Great Basin Gold (TSE:GBG) plunged 10% and Almaden Minerals (TSE:AMM) fell over 11%.
Meanwhile, copper heavyweight Teck Resources Limited (TSE:TCK.B) edged down 0.60%.
In energy, Canadian Natural Resources (TSE:CNQ) was up 1.02% and Talisman Energy (TSE:TLM) gained 1.69%, while Pengrowth Energy Corp. (TSE:PGF) fell 2.03%. Suncor Energy (TSE:SU) was up 0.95%.
Financials were lately down, with Canada’s biggest bank Royal Bank of Canada (TSE:RY) down 0.25%, Manulife Financial (TSE:MFU) off 1.58% and Sun Life Financial (TSE:SLF) lower by 0.18%.
In Canadian corporate news, TMX Group (TSE:x) announced late Tuesday that Maple Group Acquisition Corp. has won control of the Toronto Stock Exchange owner in a deal worth about $3.8 billion.
Media conglomerate Torstar Corp. (TSE:TS.B) Wednesday said its second quarter profits and revenues fell, as a soft advertising environment affected its media sales, sending its shares down over 5%.
WestJet Airlines Ltd. (TSE:WJA) said second quarter profits hit a record $42.5 million or 31 cents per share. Revenue was up 12.2 per cent to $809.3 million.
Maple Leaf Foods Inc. (TSE:MFI) reported that its net income in the second quarter was up 32 per cent. Total sales from Maple Leaf’s four business groups edged up to $1.26 billion from $1.24 billion.
Talisman Energy, the fifth largest Canadian independent oil producer, said Wednesday that second-quarter profits fell due to higher operating costs and lower commodity prices.
On the economic front, the RBC Canadian Manufacturing Purchasing Managers' Index slipped to 53.05 in July from 54.85 a month earlier. It was the index's first decline in six months and weakest reading since hitting 52.43 in March.
US/Europe
U.S. stocks were mostly higher Wednesday afternoon, on a better-than-expected labour market report and ahead of the results of the Fed’s two-day meeting – with a decision expected at about 2 p.m. ET.
Payroll provider ADP said U.S. businesses added 163,000 jobs last month. The report comes two days before the government releases its jobs numbers for July, and market reaction to the surprise figures was subtle ahead of the full employment report due out Friday.
The Dow Jones Industrial Average was lately up 37.35 points to 13,046.03, the S&P 500 rose 3.39 points to 1,382.71 and the Nasdaq lost 1.14 points to 2,938.38.
Economically speaking, the Institute for Supply Management said its index of manufacturing activity ticked up to 49.8, from 49.7 in June, underscoring the slow pace at which the economy is growing.
Wednesday’s construction outlays report indicates mild recovery in the housing sector, with construction outlays advancing 0.4% in June, following a 1.6% jump in May.
All three U.S. auto makers reported lower-than-expected July auto sales on Wednesday, as high unemployment and weak consumer confidence kept buyers away from lots and showrooms.
The largest U.S. auto maker, General Motors Co., reported a 6% drop in July U.S. sales, while Ford Motor Co. reported a 4% drop. Smaller U.S. rival Chrysler Group LLC posted a 13% increase.
The Mortgage Bankers Association's purchase index fell 2.0% in the July 27 week, but refinance applications rose 0.8%.
In US corporate news, Time Warner (NYSE:TWX) said Wednesday earnings fell 32 per cent in the second quarter amid lower ad revenue at its film and TV entertainment division.
Telecommunications giant Comcast Corp.’s (NASDAQ:CMCSA) second-quarter earnings beat analysts’ estimates, amid higher revenue and increased broadband customers.
Video games publisher Take-Two Interactive Software (NASDAQ:TTWO) late Tuesday posted a net loss and 32 percent drop in revenue in its fiscal first quarter due to weak sales of "Max Payne 3" and "Spec Ops: The Line".
Video games publisher Electronic Arts (EA)(NASDAQ:EA) late Tuesday stuck to a forecast for about 30 per cent growth in fiscal 2013 earnings, as fiscal first-quarter earnings fell 9 per cent.
Global beauty company Avon Products (NYSE:AVP) posted a large drop in second quarter profit Wednesday, as earnings fell 70 per cent, sales declined in all segments and margins narrowed.
Burger King Worldwide's (NYSE:BKW) fiscal second-quarter profit spiked 59 per cent driven by comparable sales growth, though revenue slipped.
European markets finished mixed today. The FTSE 100 gained 1.38% and the CAC 40 rose 0.91%, while the DAX lost 0.26%.
