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TSX moves lower as fiscal cliff deadline looms

Toronto's main market was slightly lower Monday, on falling commodities, and as traders focused on the looming January 1 deadline to avert the fiscal cliff amid a shortened session on Christmas Eve.  
TSX moves lower as fiscal cliff deadline looms

Toronto's main market was slightly lower Monday, on falling commodities, and as traders focused on the looming January 1 deadline to avert the fiscal cliff amid a shortened session on Christmas Eve.

With the Chirstmas holidays kicking off after markets close early today, traders are exercising caution, as budget talks in Washington to avoid the more than $600 billion in tax hikes and spending cuts set to take effect in January, have so far, failed.

Last week, Republican House Speaker John Boehner's "Plan B" was nixed after there weren’t enough votes for his plan to allow higher tax rates for those making $1 million and above. The threshold is much higher than President Obama’s $400,000, which was already a concession. 

Economists fear the fiscal cliff could tip the economy back into a recession if no deal is reached.

Back in Toronto as of about 11:30 a.m. EDT, the S&P/TSX Composite was lower by 25.57, or 0.22%, to 12,358.13, while the more junior S&P/TSX Venture Composite rose 2.98, or 0.25% to 1,180.47.

Commodities were mostly lower late Monday morning, except for gold futures - which edged higher on safe haven appeal. The yellow metal lately rose 60 cents to 1,660.70 an ounce, while silver futures shed 6 cents to $30.09 an ounce.

Elsewhere, crude oil for February dropped 22 cents to $88.44 a barrel, while the base metal copper contract fell one cent to $3.55 a pound.

Gold giants were mostly unchanged, with Kinross (TSE:K) lately flat, while Barrick Gold (TSE:ABX) edged down 0.09% and Goldcorp (TSE:G) shed 0.03%.

Toronto's main sectors were lower Monday.

Materials were lower, with declines seen in Silvercorp Metals (TSE:SMV) - down 3.66% - after it late Friday announced that it inked a deal with New Pacific Metals Corp. (TSE:NUX), that will see New Pacific acquire majority interest in its wholly owned subsidiary, Fortress Mining Inc. 

Under the terms of the agreement, New Pacific will pay Silvercorp US$3.5 million to acquire an 80% interest of FMI, with an option to acquire the remaining 20% within 2 years for $5 million.

Elsewhere, Semafo (TSE:SMF) and Mercator Minerals (TSE:ML) both fell over 3%.

Advances in the sector were seen in San Gold (TSE:SGR) - up 9.38% - while Guyana Goldfields (TSE:GUY) and Romarco Minerals (TSE:R) advanced 3.36% and 2.94%, respectively.

In other metals and mining news, Rubicon Minerals Corp (TSE:RMX) (NYSE-MKT:RBY) said late Friday that it considers the legal action brought upon the company by the Wabauskang First Nation (WFN) group to be without merit. 

The gold explorer, which is focused on its Phoneix gold project in Red Lake, Ontario, has been named in a petition for judicial review, focused on the Province of Ontario's authority to approve a production closure plan.

Energy was lower Monday, with declines seen in Niko Resources (TSE:NKO) – down 3.42% - while Pengrowth Energy (TSE:PGH) fell 3.16% and Advantage Oil and Gas (TSE:AAV) declined 2.12%.

Advancers in the sector were led by Petrominerales (TSE:PMG) - up 1.26% - while Birchcliff Energy (TSE:BIR) and Enerflex (TSE:EFX) rose 1.24% and 0.85%, respectively.

Elsewhere in the sector, Tethys Petroleum (LON:TPL) (TSE:TPL) shares rocketed 8.3% higher after it brought in two of the world’s largest oil firms to develop its huge, 35,000 square kilometre Bokhtar field in Tajikistan. French giant Total and China’s CNODC will both take a third share in the project, while Tethys’ Tajik subsidiary Kulob Petroleum will also receive US$60 mln for back costs.

Encana Corp (TSE:ECA) (NYSE:ECA) said Monday it has agreed to sell its 30% stake in the proposed Kitimat liquefied natural gas export terminal project to Chevron Canada.

Financials were lower, as Manulife Financial (TSE:MFC) lost 0.67%, while Sun Life Financial (TSE:SLF) shed 0.15% and the Royal Bank of Canada (TSE:RY) declined 0.30%.

In other corporate news, despite a better-than-expected third quarter report last week, Research In Motion (TSE:RIM) (NASDAQ:RIMM) saw its shares slide again Monday, after dropping about 23% on Friday on worries surrounding changes to the company's service revenue model.

The Waterloo-based company, which reported a drop in subscriber rolls for the first time in its history last week, also saw some analysts cut their price targets on concern that its "tiered pricing" plan could lead to a decline in revenues.

Shares of the company, which enjoyed a brief jump after third quarter results were released late Thursday, began their decline after a conference call in which CEO Thorsten Heins said the company would offer “tiers” of pricing with respect to RIM’s service access fee. The access fee is an important source of revenue for the company and comes from carriers around the world who must pay a per-device fee to access RIM’s proprietary messaging network. 

National Bank Financial analyst Kris Thompson - rated the top RIM analyst by Thomson Reuters StarMine based on the accuracy of his estimates of the company's earnings - has said that RIM will not be able to sustain profitability by relying on its hardware business alone. Thompson downgraded RIM's stock to "underperform" from "sector perform" and cut his price target to $10 from $15 after the results. 

RIM’s shares were lately down 2.03%, trading at $10.64.


U.S. stocks tumbled Monday, as investors remain concerned that Washington officials won't be able to resolve their differences with respect to the looming fiscal cliff.

U.S. markets close at 1 p.m. ET today and remain closed until Wednesday for the Christmas holiday. 

The Dow was lately down 43.54 points to 13,147.49, the Nasdaq fell 9.94 to 3,011.06, and the S&P 500 retreated 4.01 points to 1,426.14.

With most federal offices and many businesses closed on Monday, there were no economic reports or earnings results scheduled for release.

In corporate news, BP (NYSE:BP) shares were down as a federal judge gave the oil company final approval for a $7.8 billion settlement stemming from the Gulf of Mexico oil spill. 

The Wall Street Journal reported Friday that Google (NASDAQ:GOOG) is designing a new device called X Phone, to take on competitors Apple Inc. (NASDAQ:AAPL) and Samsung in the smartphone market. Shares in Google were down almost 1%. 

The newspaper also reported that Regions Financial (NYSE:RF) is the subject of a probe by federal regulators, who are looking at allegations that the bank improperly classified loans that soured during the financial crisis. The bank's stock fell almost 2%. 

Meanwhile, Alexza Pharmaceuticals (NASDAQ:ALXA) shares were lower by over 14%, despite the fact that it gained approval from the FDA for its Adasuve treatment for schizophrenia and bipolar disorder. 

Expedia (NASDAQ:EXPE) edged up after the online travel agency agreed to acquire 61.6% equity position in Trivago, a metasearch company based Dusseldorf, Germany for €477 million or $632 million in cash and €43 million in common stock. 

The deal is anticipated to close during the first half of 2013.

General Electric Company (NYSE:GE) fell 1 cent after the diversified technology agreed to purchase Italy based manufacturer of aviation components maker Avio S.p.A., for $4.3 billion. 

On the economic front this week, Wednesday will see the release of the Case-Shiller home index for October, along with data on weekly jobless claims, consumer confidence and new home sales later in the week.

Activity was light in Europe, with several major European stock exchanges closed Monday for Christmas Eve, including markets in Germany and Italy. Other markets, including the U.K., closed early. Most European markets will be closed Tuesday for Christmas and on Wednesday.

The FTSE 100 gained 0.24%, while the CAC 40 lost 0.23%. 

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October 16 2015

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