WK: TSX lower as stronger US dollar, economic worries depress commodities
TORONTO _ The Toronto stock market was negative Tuesday amid lower commodity prices and worries about the pace of a global economic recovery and the fiscal health of Japan.
The S&P/TSX composite index lost 54.7 points to 11,299.8 after eking out a slight 11-point gain on Monday. The small advance followed a three day selloff that carved almost three per cent from the main index.
The Canadian dollar was down 0.83 of a cent to 93.68 cents US amid a strengthening U.S. dollar.
The base metals sector led TSX decliners down two per cent as the March copper contract on the New York Mercantile Exchange stepped back seven cents to US$3.32 a pound. Teck Resources (TSX:TCK.B) fell 87 cents to C$38.27 and Labrador Iron Mines Holdings (TSX:LIM) ped 71 cents to $4.89.
The energy sector was off 0.8 per cent as oil prices slid well below US$75 a barrel Tuesday with the March crude contract on the Nymex declining $1.24 to $74.02 a barrel. Suncor Inc. (TSX:SU) declined 52 cents to C$34.61 and Canadian Natural Resources (TSX:CNQ) lost 76 cents to $69.56.
The February gold contract on the Nymex declined $8.80 to US$1,086.90 an ounce and the precious metals sector rose 0.54 per cent with Barrick Gold Corp. (TSX:ABX) ahead 48 cents to C$38.55.
The financial sector slid 0.75 per cent with Royal Bank (TSX:RY) down 49 cents to $52.22 and CIBC(TSX:CM) declined 60 cents to $63.48.
Investors have been discouraged in the past week by moves to restrict bank lending in China by raising reserve requirements. There were reports Tuesday that China has moved again to up those levels.
A proposal from U.S. president Barack Obama to limit banksī size and risky trading habits has also weighed on investor sentiment.
And on Tuesday, Standard & Poorīs lowered its assessment of Japanīs fiscal health, threatening a credit rating cut if the economy stays weak and debt remains sky high. In a surprise move, S&P affirmed the countryīs double-A long-term debt rating but revised its outlook to "negative" from "stable."
Britain finally emerged from recession in the last three months of 2009 _ after six consecutive quarters of falling output _ but only at a quarterly rate of 0.1 per cent as the services sector barely grew. That was way less than the 0.4 per cent consensus expectation in the markets.
There was also some major corporate dealmaking in Canada. World Color Press Inc. (TSX:WC), the Montreal-based printing giant formerly known as Quebecor World, has agreed to be taken over by Quad/Graphics Inc. in order to a combined company with 30,000 employees.
Quad/Graphics Inc. is currently the largest privately held printer in the United States but plans to go public in connection with the World Color takeover. World Color shares were unchanged at $10.02
The TSX Venture Exchange moved 19.91 points lower to 1,596.25.
New York markets were tepid amid the latest batch of earnings news with the Dow Jones industrials off two points to 10,194.9 after rising 24 points.
The Nasdaq composite index lost 7.85 points to 2,202.95 despite a positive earnings report from Apple Inc. while the S&P 500 index was down 3.05 points 1,093.75.
Huge sales of the iPhone and Macintosh computers led to a nearly 50 per cent jump in net income at Apple.
Apple also offered a profit and revenue forecast above Wall Street forecasts and its shares were up about 2.1 per cent in pre-market trading.
On Tuesday, earnings from some major companies, including insurer Travelers Cos., and chemical company DuPont also provided some hope that the economy is strengthening.
In Canada, Indigo Books and Music Inc. (TSX:IDG) said Monday it earned $34.5 million for the quarter, up nearly 30 per cent from the same period a year earlier. Its shares moved ahead 46 cents to $16.96.
In economic news, the closely watched Standard & Poorīs/Case-Shiller home price index shows that home prices rose nationally for the sixth straight month in November, with 14 of 20 metro areas tracked showing improvements. The index inched up 0.2 per cent to a seasonally adjusted reading of 145.49. The index was off 5.3 per cent from November last year.
The index is now up 3.4 per cent from its bottom in May, but still 30 per cent below its peak in April 2006.
Investors are looking ahead to consumer confidence data coming out later in the morning. The Conference Boardīs index is expected to show a third straight month of improvement, but also that the economy is still far from healthy. The Conference Boardīs consumer confidence index likely rose to 53.5 from 52.9 in December.
A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.
Overseas, Chinaīs Shanghai index led the region in losses following reports that Chinaīs banks have had their reserve requirements increased again. The benchmark Shanghai Composite Index fell 2.4 per cent to its lowest since Oct. 30, 2009.
Elsewhere in Asia, Japanīs Nikkei 225 stock average retreated 1.8 per cent and Hong Kongīs Hang Seng sank 2.4 per cent.
Londonīs FTSE 100 index dipped 0.13 per cent, Frankfurtīs DAX was flat and the Paris CAC 40 declined 0.5 per cent.
