Source: The Canadian Press
Commodity stocks sent the Toronto stock market to a small loss Tuesday following weak consumer confidence reports from both sides of the border.
The S&P/TSX composite index lost 29.38 points to 11,716.69.
The drop came on the heels of a report that Americans’ confidence in the economy eroded further in July. The reading raises concerns about the U.S. recovery, which is seen as a major driver of growth for Canadian exports.
The Conference Board, a American economics forecaster based in New York City, said its consumer confidence index slipped to 50.4 in July, down from the revised 54.3 in June. A reading above 90 indicates an economy on solid footing.
And a similar consumer confidence index by the Ottawa-based Conference Board of Canada fell for the second straight month in July, losing 3.7 points to 80.
“The data is very mixed, but clearly it’s looking weaker than it was in April or May, so the market’s reacting to that,” said John Stephenson, portfolio manager at First Asset Funds in Toronto.
He added that he expects trading to remain “volatile and sideways” or the time being.
The TSX also reacted to lower gold and oil prices, which pressured the commodity-heavy market.
Gold stocks were the biggest losers on the TSX, falling 2.8%. The August bullion contract on the New York Mercantile Exchange lost $25.10 at US$1,158 an ounce as concerns about Europe’s financial sector dissipated, causing investors to sell the safe-haven precious metal. Shares in Barrick Gold Corp. (TSX:ABX) were down $1.68 or 3.9% at C$41.44.
The Toronto energy sector lost 0.4% as the September crude contract fell $1.48 to US$77.50 a barrel. This followed the weak consumer confidence report, which indicated the U.S. recovery may be stagnating. Shares in Suncor Energy Inc. (TSX:SU) lost 19 cents to C$33.49.
The base metals sector fell 0.8% as the September copper contract lost 1.65 cents to US$3.21 a pound. Shares in Teck Resources Ltd. (TSX:TCK.B) were down 98 cents to C$35.90.
Financial stocks helped to offset the declines in other sectors, adding 1.6% after some major European banks, including UBS AG of Switzerland and Deutsche Bank AG of Germany, reported strong earnings.
The results came a few days after “stress tests” of banks across Europe found that the vast majority would survive another economic downturn. Shares in Toronto-Dominion Bank (TSX:TD) gained 83 cents to $73.75.
The Canadian dollar slipped 0.35 of a cent to 96.51 cents U.S., while the TSX Venture Exchange was down 7.18 points to 1,396.28.
New York markets were mixed following the consumer confidence data. The Dow Jones industrial average gained 12.26 points to 10,537.69. The Nasdaq composite index was down 8.18 points at 2,288.25 while the S&P 500 index fell 1.17 points to 1,113.84.
The bleak consumer confidence data was offset by some upbeat earnings. Chemical maker DuPont Co. became the latest company to easily top second-quarter profit and revenue forecasts Tuesday. DuPont also raised its profit outlook for the year. Such outlooks have been a boon to the market because they indicate companies are gaining confidence in a global economic recovery.
Investors have been torn over the past few months between buying on companies’ upbeat reports and selling on government and private sector numbers that keep pointing to a slowing of the economy.
“There’s a gap between the fairly solid earnings, especially out of the U.S., and the somewhat deteriorating fundamentals, particularly south of the border,” Stephenson said.
News that BP had the biggest quarterly loss in its history didn’t have much impact on Wall Street because it was widely expected by investors. The US$17-billion second-quarter loss was reported as the company officially announced that American Bob Dudley will take over from Tony Hayward as CEO later this year.
And markets shrugged off a report that U.S. home prices rose 1.3% in May as federal tax incentives pulled more buyers into the market. This was slightly less than the 4% increase economists had expected from the Standard & Poor’s/Case-Shiller index.
In Canadian corporate news, the board of Tomkins PLC has given its blessing to a $4.5-billion takeover offer from Onex Corp. (TSX:OCX) and the Canada Pension Plan Investment Board, which have teamed up to buy the U.K.-based global manufacturing company. Shares in Onex gained 15 cents to C$27.35.
Rogers Communications Inc. (TSX:RCI.B) increased both profit and revenue in the second quarter. However, the company said increased competition resulted in fewer net subscriber additions to its wireless services compared with last year and it didn’t raise its guidance for the year. Shares in Rogers fell 57 cents to $36.83.
Talisman Energy Inc. (TSX:TLM) reported a nearly tenfold jump in second-quarter net income, to $603 million compared with $63 million a year earlier. Shares in Talisman gained 40 cents to $17.49.
And currency fluctuations had a negative impact on third-quarter revenue at CGI Group Inc. (TSX:GIB.A), but its profit was up 12% from a year earlier to $85.9 million. Shares in CGI lost 77 cents or 4.7% to $15.46.