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TSX lower as falling commodities, fiscal cliff concerns weigh

Toronto's main market was lower Thursday, on falling commodities and ongoing concern over stalled budget negotiations in the U.S. to avert the looming fiscal cliff.
TSX lower as falling commodities, fiscal cliff concerns weigh

Toronto's main market was lower Thursday, on falling commodities and ongoing concern over stalled budget negotiations in the U.S. to avert the looming fiscal cliff.

Traders largely ignored positive economic data in North America, instead focusing on the budget talks in Washington to avoid the more than $600 billion in tax hikes and spending cuts set to take effect in January unless Congress can reach an agreement. 

Things turned negative yesterday after President Barack Obama opposed Republican speaker John Boehner’s bill that would raise taxes on people earning over $1 million a year. House Republicans are set to vote on the proposed plan today, but Obama said Wednesday he would veto the bill.

Back in Toronto as of about 12:15 p.m. EDT, the S&P/TSX Composite was lower by 56.40 points, or 0.45%, to 12,347.23, while the more junior S&P/TSX Venture Composite fell 6.31 points, or 0.54%, to 1,170.21.

Commodities were lower Thursday afternoon, with gold for February slumping on the state of fiscal-cliff negotiations and amid the Commerce Department’s increased estimate for third-quarter growth in the U.S.

The yellow metal lately fell $28 to $1,639.70 an ounce. Meanwhile, silver sunk $1.28 to $29.77 an ounce.

Elsewhere, crude oil for February shed 40 cents to $89.58 a barrel, while the base metal copper contract dropped 7 cents to $3.54 a pound.

Toronto's main sectors were mostly lower, with only industrials, info tech and utilities lately posting gains.

Gold giants were lower, with Kinross (TSE:K) down 2.67%, while Barrick Gold (TSE:ABX) fell 2.6% and Goldcorp (TSE:G) declined 2.84%.

Materials were led lower by Romarco Minerals (TSE:R) down 8.33%, while Capstone Mining (TSE:CS) fell 7.26% after it late Wednesday said cash costs will be significantly higher in the first half of 2013 at its Minto operation, due to mining costs associated with low grade ore. 

Advances in the sector were seen in West Fraser Timber (TSE:WFT) – up 4.69% - while Canexus Corp. (TSE:CUS) and Centerra Gold (TSE:CG) both advanced over 2.5%. 

Energy was lower Thursday, with declines seen in Petrominerales (TSE:PMG) – down 3.66% as it announced its 2013 capital program and operational update. The company also said it has received commitments from a syndicate of banks for an increased US$250 million credit facility.

Meanwhile, Niko Resources (TSE:NKO) fell 3.2%, despite announcing the spudding of the Ajek-1 well in the Kofiau block in Indonesia. The Ajek-1 well is to be drilled to a depth of about 5,900 feet and is expected to take 40 to 45 days.

Financials were lower, led by wealth manager AGF Management (TSE:AGF.B) – down 2.79% - while Fairfax Financial (TSE:FFH.U) lost 1.1%.

Elsewhere in the sector, Manulife Financial (TSE:MFC) rose 0.07%, Sun Life Financial (TSE:SLF) added 0.08% and the Royal Bank of Canada (TSE:RY) advanced 0.15%.

In other corporate news, Montreal-based train and plane maker Bombardier (TSE:BBD.B) said Thursday that it has inked a deal with airBaltic for up to 20 Bombardier CS300 airliners valued at up to US$1.57 billion. The company said that airBaltic has signed a firm purchase agreement for 10 all-new Bombardier CS300 airliners, with purchase rights on a further 10 aircraft. 

On the economic front, Statistics Canada said average weekly earnings of non-farm payroll employees rose to $909 in October, up 0.9% from September.

On a year-over-year basis, earnings were up 2.8%, reflecting wage growth and changes in the composition of employment by industry as well as the average number of hours worked.

Statistics Canada also reported retail sales edged up 0.7% to $39.4 billion in October, the fourth straight monthly increase, with eight of 11 subsectors reporting gains.

US/Europe

U.S. stocks were mixed Thursday, as traders took in a slew of economic reports and as House Speaker John Boehner delayed until tonight a vote on his plan to increase taxes on those with incomes of more than $1 million. 

Boehner originally wanted tax increases on no one, but the threshold is still much higher than President Obama’s $400,000 threshold, which was already a concession. 

The Dow was lately down 12.98 points to 13,238.99, the Nasdaq was lower by 4.26 points to 3,040.10, and the S&P 500 rose 0.37 points to 1,436.18. 

On the economic front, initial jobless claims rose by 17,000 to 361,000 last week, compared to a slight upwardly revised reading of 344,000 the week before, which was surprisingly low. 

Consensus estimates were calling for jobless claims of 359,000 last week. 

Also Thursday, the Commerce Department released its third estimate of third quarter GDP, which was revised upward to 3.1%, up from an initial estimate of 2% and a revised estimate of 2.7%, as well as a second quarter rate of 1.3%. The consensus estimate was for 2.8% GDP growth in the third quarter.

Meanwhile, an easing in the number of distressed properties on the market is definitely giving the housing sector a lift with the latest evidence coming from existing home sales, which surged 5.9% in November to a 5.04 million annual rate that beats even the high-end Econoday estimate.

The number of distressed sales came to 22% in the month, down from 24 percent in October. 

And the Philadelphia Fed's Business Outlook Survey for December, which has been depressed through most of the year, has popped back into expansion at 8.1 versus November's minus 10.7. New orders are at plus 10.7 in this month's report, which is only the third positive reading since April. 

In corporate news, IntercontinentalExchange (NYSE:ICE) has agreed to buy NYSE Euronext (NYSE:NYX) in a stock and cash deal valued at $8.2 billion, or $33.12 a share. 

Oracle Corp. (NASDAQ:ORCL) said Thursday it plans to buy Eloqua Inc. (NASDAQ:ELOQ) for $23.50 a share, or about $871 million, net of Eloqua's cash. Oracle said the deal will add a marketing platform to its cloud offerings. 

EQT Corp. (NYSE:EQT) said it has agreed to sell its natural gas distribution business to Peoples Natural Gas for $720 million in cash, in an effort to focus on natural gas production.

On the earnings front, KB Home (NYSE:KBH) reported on Thursday that fiscal-fourth-quarter net income fell 44% on 20% higher revenue. The company still beat estimates, however. 

Rite Aid Corp. (NYSE:RAD) said it swung to a third-quarter profit, topping analyst views, though revenue edged down slightly to $6.24 billion from $6.31 billion. Looking ahead, Rite Aid expects its 2013 results to range from a loss of 3 cents a share to a profit of 5 cents a share, better than the analyst target for a loss of 15 cents a share. 

ConAgra Foods (NYSE:CAG) said Thursday its second-quarter profit increased to $211.6 million, or 51 cents a share, while net sales rose by 8.9% to $3.74 billion. Wall Street analysts expected the company to earn 55 cents a share on sales of $3.68 billion, according to a survey by FactSet. 

The company lifted its fiscal 2013 forecast to at least $2.06 a share, up from its earlier estimate of $2.03 to $2.06 a share. Analysts expect the company to earn $2.07 for the year. 

Shares of Bed Bath & Beyond (NASDAQ:BBBY) slid more than 9% after releasing a fourth-quarter earnings-per-share outlook of $1.60 to $1.67, below the $1.75 projected by analysts in a Thomson Reuters survey. 

After the bell, earnings from Blackberry maker Research in Motion (NASDAQ:RIMM) (TSE:RIM) and Nike (NYSE:NKE) are expected. 

European markets finished mixed as of the most recent closing prices. The CAC 40 gained 0.21% and the DAX rose 0.05%. The FTSE 100 lost 0.05%.



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Article
October 16 2015

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