Canadian Stocks Ends Sharply Lower On Global Cues -- Canadian Commentary

(RTTNews) - Canadian stocks snapped a seven-day gain to end sharply lower on Thursday, tracking declining global equity markets after a technical default by Argentina on its debts, raising serious concerns about the economic recovery in the region.

Argentina was declared to be in technical default after talks with U.S. bond-holders failed to persuade the creditors for a restructuring. A U.S. District Judge ruled that Argentina cannot pay its restructured bondholders until the hedge funds are compensated. The creditors have about $1.5 billion due to them.

Argentina has blamed the U.S. for its default and also accused the mediator in failed talks with the creditors, after last-minute talks in New York with representatives of the hedge funds failed. The bond-holders demand full pay-out of $1.3 billion, on debts bought cheaply after the economic crisis of 2001.2002 when Argentina defaulted. economic crisis in 2001-2002.

Investors on both sides of the border continued to mull over yesterday's conflicting remarks from the U.S. Federal Reserve. The Fed gave mixed signals on the condition of the U.S. jobs market Wednesday, trumpeting recent improvements but warning of considerable slack in the labor market.

The initial reading on the Fed statements generated positive sentiment, but a rally in global equities has run out of steam this morning amid concerns about valuations and Argentina's finances.

Meanwhile, data from Statistics Canada showed Real gross domestic product rose 0.4 percent in May, a fifth consecutive monthly increase, as auto makers cranked out new vehicles.

Almost all major sub-indices of the TSX were in the red, except for the information technology sector.

The S&P/TSX Composite Index closed Thursday at 15,330.73 , down 194.09 points or 1.25 percent. The index scaled a intraday high of 15,524.82 and a low of 15,275.05.

On Wednesday, Canadian stocks ended at a record high on strong earnings and some solid U.S. economic growth data, with the Federal Reserve refraining from hiking rates at the current time.

Crude oil plummeted on demand growth concerns after some dismal economic data from the U.S. with initial claims for unemployment benefits rising and slower growth in manufacturing activity in the Chicago area.

The Energy Index dived 1.75 percent, with U.S. crude oil futures for September delivery plunging $2.10 or 2.1 percent to close at $98.17 a barrel Thursday on the Nymex.

Among energy stocks, Encana Corp. (ECA.TO) dropped 2.25 percent, Canadian Natural Resources Ltd. (CNQ.TO) fell 2.72 percent, and Canadian Oil Sands Limited (COS.TO) dived 3.20 percent. Cenovus Energy (CVE.TO) lost 0.36 percent, after having reported yesterday that its second quarter profit jumped by over three times.

Suncor Energy Inc. (SU.TO) surrendered 2.23 percent, after announcing its net income during the second quarter dropped sharply after taking huge charges related to its holdings in Canadian oil sands and in Libya. The company hiked it dividend by 22 percent.

The Financial Index shed 0.61 percent with Toronto-Dominion Bank losing 0.49 percent, National Bank of Canada (NA.TO) surrendered 0.77 percent, Bank of Nova Scotia (BNS.TO) slipped 0.46 percent, Canadian Imperial Bank Of Commerce (CM.TO) lost 0.83 percent, Royal Bank of Canada (RY.TO) faltered 0.24 percent, and Bank of Montreal (BMO.TO) fell 0.70 percent.

The Capped Healthcare Index dived 2.70 percent with Valeant Pharmaceuticals International, Inc. (VRX.TO) plunging 6.91 percent, Catamaran Corp. (CCT.TO) slipped 0.88 percent, and Extendicare (EXE.TO) down 0.27 percent.

Gold futures ended sharply lower on some disappointing data from the U.S. with initial claims for unemployment benefits rising more than expected last week. With an impressive U.S. gross domestic product growth in the second quarter, gold found little safe haven support, even as global equity markets slumped.

Global Gold Index declined 2.21 percent, with gold futures for August delivery shedding $13.60 or 1.1 percent to close at $1,281.30 an ounce on the Nymex Thursday.

Among gold stocks, Detour Gold Corporation (DGC.TO) dropped 1.29 percent, while Yamana Gold Inc. (YRI.TO) added 2.42 percent, Barrick Gold Corp. (ABX.TO) dropped 2.18 percent, and Kinross Gold Corp. (K.TO) surrendered 2.02 percent.

Goldcorp Inc. (G.TO) shed 1.26 percent after reporting second-quarter net earnings of $181 million or $0.22 per share, compared to net loss of $1.93 billion or $2.38 per share a year ago.

Kinross Gold Corp. (KGC, K.TO) Wednesday reported second-quarter net earnings of $46 million or $0.04 per share. This compares with a loss of $2.5 billion or $2.17 per share last year.

Barrick Gold Corp. (ABX, ABX.TO) said second-quarter net loss of $269 million or $0.23 per share, compared to a net loss of $8.56 billion or $8.55 per share in the prior year quarter.

The Capped Materials Index dropped 1.94 percent on gold mining stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) slipping 1.55 percent.

The Diversified Metals & Mining Index added 2.27 percent, with First Quantum Minerals Ltd. (FM.TO) losing 4.33 percent, Lundin Mining Corp. (LUN.TO) down 0.48 percent and Teck Resources Limited (TCK.B.TO) surrendered 2.06 percent.

The Capped Industrials Index slipped 1.16 percent, with Bombardier Inc. (BBD.B.TO) gathering 1.63 percent, after reporting its second-quarter net income declined to $155 million or $0.08 per share, from $180 million or $0.10 per share in the prior year.

Canadian Pacific Railway Ltd.(CP. TO) is down 1.48 percent, and SNC-Lavalin Group Inc. (SNC.TO) surrendered 1.30 percent.

The Capped Telecommunications Index added 0.82 percent, with Telus Corp. (T.TO) down 0.42 percent, BCE Inc. (BCE.TO) down 0.76 percent, Rogers Communications Inc. (RCI.B.TO) lost 0.68 percent, and Bell Aliant Inc. (BA.TO) down 1.25 percent.

The Information Technology Index shed 1.15 percent, with BlackBerry Limited (BB.TO) down 3.78 percent, Avigilon Corp. (AVO.TO) slipped 0.70 percent, and Open Text Corp. (OTC.TO) surged 14.53 percent.

In corporate news, Shaw Communications Inc.(SJR.B.TO) shed 2.84 percent after agreeing to acquire a 100% interest in ViaWest, Inc from Oak Hill Capital Partners and other shareholders for an enterprise value of US$1.2 billion.

Maple Leaf Foods (MLF.TO) trimmed its second-quarter loss to $12 million, or 13 cents a share.

In economic news from the U.S., a report from the Labor Department said first-time claims for U.S. unemployment benefits climbed to 302,000, an increase of 23,000 from the previous week's revised level of 279,000. Economists expected jobless claims to rise to 301,000 from the 284,000 originally reported for the previous week.

Meanwhile, MNI Indicators said the Chicago business barometer tumbled to a reading of 52.6 in July after dipping to 62.6 in June. While a reading above 50 indicates continued growth in Chicago-area business activity, economists had expected the index to inch back up to 63.0.

Eurozone inflation slowed to the lowest level in four-and-a-half years in July, even after the European Central Bank cut the interest rates to historic lows, necessitating more action to elude the risk of deflation.

Euro area inflation slowed to 0.4 percent in July from 0.5 percent in June, flash estimate from Eurostat revealed today. The figure was expected to remain unchanged at 0.5 percent.

The unemployment rate in the 18-nation bloc declined unexpectedly in June to the lowest since September 2012 from a record high seen at the end of last year as labor market conditions improved notably in Germany and Spain. Meanwhile, the signs of improvement in Italy was dampened by the youth joblessness hitting a record.