TSX Ends A Tad Lower As Commodity Prices Drop -- Canadian Commentary

(RTTNews) - Canadian stocks ended slightly lower Tuesday, due mainly to a sharp decline in gold and crude oil prices even as concerns over escalating tensions between Ukraine and Russia persisted with reports of intense fighting from the troubled region.

Nonetheless, the losses were limited on some upbeat economic news from the U.S. with positive European markets amid hopes the European Central Bank will announce some monetary easing later this week.

In economic news from the U.S., activity in the U.S. manufacturing sector unexpectedly grew at an accelerated rate in August, a report from the Institute for Supply Management showed Tuesday, with the index of activity in the sector climbing to a three-year high. Meanwhile, construction spending in the U.S. rebounded more than expected in July, after reporting an unexpected drop in spending in the previous month, according to a Commerce Department release.

China's Purchasing Managers' Index for August was reported at 51.1 by the National Bureau of Statistics and China Federation of Logistics and Purchasing on Monday. Economists expected a reading of 51.2 estimate against the 51.7 in July. The final reading of factory activity from HSBC Holdings Plc and Markit Economics was 50.2, compared to economists' expectation of 50.3.

Geopolitical tensions continued to keep investors on edge, as the European Union and the United States are reportedly close to announcing fresh sanctions against Russia for its role in the Ukraine crisis. There were reports of heavy fighting in eastern Ukraine, as calls for a ceasefire were largely ignored with Ukraine reportedly unwilling to give up the fight against pro-Russia separatists.

The S&P/TSX Composite Index closed Tuesday at 15,619.08, down 6.65 points or 0.04 percent. The index scaled a intraday high of 15,627.77 and a low of 15,574.14.

On Friday, the TSX ended higher after the Canadian economy grew better than expected with investors tracking strength in U.S. and European markets, despite escalating tensions between Ukraine and Russia.

Crude oil plummeted to end sharply lower on concerns over demand growth prospects as the dollar strengthened against some major currencies, even as some weak Chinese factory data outweighed persistent worries about the situation Ukraine.

The Energy Index plunged 1.85 percent, with U.S. crude oil futures for October delivery plummeting $3.08 or 3.2 percent to close at $92.88 a barrel Tuesday on the Nymex.

Among energy stocks, Cenovus Energy Inc. (CVE.TO) dropped 1.73 percent, Enbridge Inc. (ENB.TO) gained 1.33 percent, Suncor Energy Inc. (SU.TO) shed 2.15 percent, Encana Corp. (ECA.TO) gained 1.28 percent, Canadian Natural Resources Limited (CNQ.TO) down 2.55 percent, and Talisman Energy (TLM.TO) slipped 0.64 percent.

The Financial Index added 0.43 percent, with Toronto-Dominion Bank (TD.TO) inching up 0.09 percent, Canadian Imperial Bank of Commerce (CM.TO) up 0.83 percent, Royal Bank of Canada (RY.TO) up 0.46 percent, Bank of Nova Scotia (BNS.TO) up 0.32 percent, National Bank of Canada (NA.TO) up 0.42 percent, and Bank of Montreal (BMO.TO) up 1.15 percent.

Gold futures plunged as the dollar strengthened after some upbeat economic data from the U.S. with manufacturing activity rising better than expected in July, while construction spending also rebounded more than anticipated.

Global Gold Index plummeted 2.85 percent, with gold for December delivery shedding $22.4 or 1.7 percent to close at $1,265.00 an ounce on the New York Mercantile Exchange Tuesday.

Among gold stocks, B2Gold Corp. (BTO.TO) dropped 3.21 percent, Yamana Gold Inc. (YRI.TO) lost 2.81 percent, Eldorado Gold Corp. (ELD.TO) declined 4.00 percent, and Kinross Gold Corp. (K.TO) down 1.86 percent.

Barrick Gold Corp. (ABX.TO) down 2.35 percent, while Goldcorp Inc. (G.TO) dived 4.23 percent.

The Capped Materials Index dived 1.62 percent mostly on declining gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) inching up 0.03 percent.

The Diversified Metals & Mining Index declined 1.02 percent, with First Quantum Minerals Ltd. (FM.TO) down 1.52 percent, Lundin Mining Corp. (LUN.TO) down 1.03 percent, Sherritt International Corp. (S.TO) down 2.34 percent, and Teck Resources Limited (TCK.B.TO)down 0.93 percent.

The Capped Industrials Index gained 1.24 percent, with Air Canada (AC.B.TO) rising 3.53 percent and Bombardier Inc. (BBD.B.TO) down 0.27 percent.

The Capped Telecommunications Index rose 0.40 percent, with Rogers Communications Inc. (RCI.B.TO) up 0.11 percent and BCE Inc. (BCE.TO) up 0.49 percent.

The Information Technology Index added 1.53 percent, with BlackBerry Limited (BB.TO) jumping 3.35 percent.

The Healthcare Index added 1.49 percent, with Valeant Pharmaceuticals International Inc. (VRX.TO) adding 3.00 percent.

The Consumer Discretionary Index moved up 0.51 percent, with Tim Hortons Inc. (THI.TO) gaining 2.08 percent amid its merger deal with Burger King Worldwide Inc. (BKW) in focus.

According to a regulatory filing by Burger King, Tim Hortons will have to pay C$345 million as termination fee to Burger King Worldwide, Inc. (BKW), if it backs out from the $11 billion merger deal. In the event of the deal failing to receive regulatory approvals, Burger King will pay a termination fee of C$500 million to Tim Hortons.

Pembina Pipeline Corp. (PPL.TO) gained 2.98 percent after stating Tuesday that it has reached agreements to acquire the Vantage pipeline system and Mistral Midstream Inc.'s interest in the Saskatchewan Ethane Extraction Plant for total consideration of $650 million from certain entities affiliated with Riverstone Holdings LLC.

Ballard Power Systems (BLD.TO) added 0.72 percent after announcing that Randall MacEwen will replace John Sheridan as President and Chief Executive Officer of the company, effective October 6, 2014.

Stillwater Mining Co. (SWC.U.TO) ended flat at $18.50 a share after announcing that Stillwater Canada Inc will scale back activities associated with the Marathon PGM-copper project.

In economic news from the U.S., the Institute for Supply Management on Tuesday said its purchasing managers index jumped to 59.0 in August, with the index of activity in the manufacturing sector climbing to a three-year high from 57.1 in July. A reading above 50 indicating growth in the manufacturing sector. Economists expected the index to edge down to 56.8. The manufacturing index was at its highest since reaching 59.1 in March of 2011.

Meanwhile, construction spending in the U.S. jumped 1.8 percent to an annual rate of $981.3 billion in July after falling by 0.9 percent to a revised $963.7 billion in June, a Commerce Department report showed. Economists expected spending to increase by about 1.0 percent compared to the 1.8 percent drop originally reported for the previous month.

From Europe, U.K 's construction activity grew at a faster pace in August, defying expectations of a slow down, a a survey by Markit Economics and the Chartered Institute of Purchasing & Supply, or CIPS, showed Tuesday. The Markit/CIPS construction purchasing managers' index rose to 64 in August from 62.4 in July. Economists expected the index at 61.5. This marked the fastest rate of increase since January and the second-strongest rate of expansion since the pre-recession peak of August 2007.

From the eurozone, prices of goods from euro zone factories resumed their decline in July, putting further pressure on the European Central Bank to announce monetary stimulus at this week's meeting. Producer prices fell 0.1% from June, and were down 1.1% from July 2014, according to the European Union's statistics.

During the week, traders will be looking ahead to a slew of economic reports including the U.S. non-farm payrolls data for August. The private sector employment report from ADP and weekly jobless claims data are also awaited.