Canadian Stocks Are Down On China Concerns -- Canadian Commentary

(RTTNews) - The Canadian stock market is losing ground in early trade Tuesday on global economic concerns. Chinese stocks sank to their lowest level in nearly three months after a weak manufacturing report and a drop in the yuan. However, rising gold prices and an uptick in oil prices is helping to soften the blow to the Canadian stock market.

The Chinese market dropped nearly 7 percent and was halted for the rest of the trading session as a newly launched circuit breaker mechanism kicked in for the first time.

China's manufacturing sector continued to contract in December on weak orders and a renewed fall in output, reflecting the complexity in achieving its ambitious growth target for 2015.

The Caixin Purchasing Managers' Index fell unexpectedly to 48.2 in December from 48.6 in November, survey data from Markit revealed Monday. It was forecast to rise marginally to 48.9.

At the same time, the official manufacturing PMI came in at 49.7, slightly up from 49.6 in November.

Markets in Europe are trading solidly in negative territory on the first trading day of 2016. The European markets are following weak cues from Asia after the disappointing Chinese manufacturing report.

Markets in the United States are also under pressure this morning on concerns over China.

Indicating a second consecutive month of contraction in U.S. manufacturing activity, the Institute for Supply Management released a report on Monday unexpectedly showing a drop by its manufacturing index in the month of December.

The ISM said its purchasing managers index edged down to 48.2 in December from 48.6 in November. The modest drop came as a surprise to economists, as the consensus estimate called for the index to inch up to a reading of 49.2.

The benchmark S&P/TSX Composite Index is down 219.07 points or 1.68 percent at 12,790.88.

On Thursday, the index closed down 132.34 points or 1.01 percent, at 13,009.95. The index scaled an intraday high of 13,098.61 and a low of 12,987.97.

The Gold Index is climbing 3.81 percent. Gold prices are rising Monday morning, edging away from December's 6-year lows as big losses for equities boosted bullion's safe haven appeal.

Barrick Gold (ABX.TO) is advancing 5.76 percent and Eldorado Gold (ELD.TO) is rising 2.68 percent. IAMGOLD (IMG.TO) is surging 6.60 percent and Yamana Gold (YRI.TO) is higher by 4.28 percent. Goldcorp (G.TO) is increasing 4.07 percent and B2Gold (BTO.TO) is adding 2.14 percent. Kinross Gold (K.TO) is gaining 3.98 percent and Royal Gold (RGL.TO) is climbing 4.66 percent.

The Capped Materials Index is also up 1.12 percent. Franco-Nevada (FNV.TO) is rising 2.56 percent and Agnico Eagle Mines (AEM.TO) is up 3.30 percent. Silver Wheaton (SLW.TO) is climbing 1.74 percent.

The Energy Index is increasing 0.24 percent. Crude oil prices are rising Monday morning amid concerns that the rift between Iran and Saudi Arabia might disrupt supplies from the Middle East.

Saudi Arabia cut diplomatic ties with fellow OPEC member Iran on Sunday after its embassy in Tehran was attacked. Iranians were protesting the Saudi execution of prominent Shiite Muslim cleric Nemer al-Nemer.

Encana (ECA.TO) is advancing 1.99 percent and Crescent Point Energy (CPG.TO) is adding 0.93 percent. Tourmaline Oil (TOU.TO) is also rising 0.89 percent.

The Diversified Metal and Mining Index is declining 3.44 percent. First Quantum Minerals (FM.TO) is falling 5.41 percent and HudBay Minerals (HBM.TO) is losing 2.07 percent. Capstone Mining (CS.TO) is surrendering 5.68 percent and Lundin Mining (LUN.TO) is down 0.79 percent.

The Capped Health Care Index is losing 2.96 percent. Extendicare (EXE.TO) is falling 2.38 percent and Concordia Healthcare (CXR.TO) is dropping 4.24 percent. Valeant Pharmaceuticals International (VRX.TO) is also lower by 3.89 percent.

The Capped Information Technology Index is down 2.90 percent. BlackBerry (BB.TO) is weakening by 3.19 percent and Descartes Systems Group (DSG.TO) is falling 3.05 percent. Avigilon (AVO.TO) is decreasing 2.41 percent and Constellation Software (CSU.TO) is lower by 3.45 percent. Sierra Wireless (SW.TO) is also dipping 0.05 percent.

The Capped Industrials Index is lower by 2.56 percent. CAE (CAE.TO) is falling 0.91 percent and AutoCanada (ACQ.TO) is losing 0.54 percent. Canadian Pacific Railway (CP.TO) is decreasing 2.64 percent and Canadian National Railway (CNR.TO) is sinking 3.62 percent. Finning International (FTT.TO) is down 1.50 percent and Bombardier (BBD_A.TO) is declining 1.34 percent. Air Canada (AC.TO) is dropping 3.33 percent.

WestJet Airlines (WJA.TO) is also down 1.67 percent. The company announced that it expects to set a new single-day record today. It expects to fly 74,247 guests across its network.

The heavyweight Financial Index is falling 1.94 percent. Royal Bank of Canada (RY.TO) is decreasing 2.18 percent and Toronto-Dominion Bank (TD.TO) is down 1.68 percent. Bank of Montreal (BMO.TO) is lower by 2.42 percent and Bank of Nova Scotia (BNS.TO) is declining 1.43 percent. National Bank of Canada (NA.TO) is dropping 1.69 percent and Canadian Imperial Bank of Commerce (CM.TO) is losing 1.33 percent.

The Capped Telecommunication Services Index is losing 1.35 percent. Manitoba Telecom Services (MBT.TO) is falling 0.40 percent and BCE (BCE.TO) is decreasing 1.27 percent. Rogers Communication (RCI-A.TO) is down 3.70 percent and TELUS (T.TO) is declining 1.83 percent.

CCL Industries (CCL-B.TO) is losing 3.01 percent. The company has acquired Mabel's Labels Inc. and Mabel's Labels Retail Inc. for $12 million.

On the economic front, Eurozone manufacturing activity expanded at the fastest pace since April 2014, final survey data from Markit showed Monday. The final manufacturing Purchasing Managers' Index rose to 53.2 in December from 52.8 in November. The flash score was 53.1.

Germany's manufacturing sector expanded more than initially estimated in December, final data from Markit showed Monday. The Markit/BME manufacturing Purchasing Managers' Index rose to 53.2 in December from 52.9 in November. The reading signaled the strongest improvement in the sector for four months. The flash PMI reading was 53.

Germany's consumer prices rose for a third straight month in December, but the pace of increase eased, defying expectations for an acceleration, preliminary data from Destatis showed Monday. The consumer price index climbed 0.3 percent year-on-year following 0.4 percent increase in November, which was the fastest pace in six months. Economists had expected a 0.6 percent gain.

German employment growth, which has lasted over a decade, continued in 2015 with the number of those with jobs setting a reunification-high, largely helped by a resilient economy and immigration of foreign workers.

The number of residents in employment rose by 324,000 persons or 0.8 percent to 43 million last year, provisional data from Destatis showed Monday. The pace of increase slowed slightly from the 0.9 percent registered in the previous year.

Meanwhile, the number of unemployed fell by 140,000 persons or 6.7 percent to 1.95 million. The figure fell below 2 million for the first time since the German reunification.

The ILO unemployment rate declined to 4.3 percent from 4.7 percent, which was just below the EU average rate.

France's manufacturing sector activity expanded less than initially estimated in December, final data from Markit showed Monday. The manufacturing Purchasing Managers' Index rose to 51.4 in December from 50.6 in November. It was the highest reading since March 2014 but below the flash score of 51.6.

The U.K. manufacturing sector growth eased unexpectedly in December, due to a further slowdown in growth of output and new orders, survey data from Markit Economics showed Monday.

The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index for manufacturing fell to 51.9 in December from 52.5 in the previous month. Economists had expected the index to improve to 53.0.

U.K. mortgage approvals rose to a 3-month high in November, the Bank of England reported Monday. The number of mortgages approved for house purchases rose to 70,410 in November from 69,867 in the prior month. It was forecast to rise to 69,900. It was the highest level since August.

In commodities, crude oil futures for February delivery are up $1.17 or 3.16 percent at $38.21 a barrel.

Natural gas for February is down 0.006 or 0.26 percent at $2.331 per million btu.

Gold futures for February are up $21.60 or 2.04 percent at $1,081.80 an ounce.

Silver for March is up $0.352 or 2.55 percent at $14.155 an ounce.