TSX Ends Lower As Resource Stocks Decline -- Canadian Commentary

(RTTNews) - Canadian stocks snapped a two-day gain to end lower on Monday, led by resource stocks on some sharp sell-off in the energy sector after Goldman Sachs trimmed its crude oil price forecast for 2015.

Some weaker than expected U.S. pending home sales data for September and weak economic data from the eurozone, coupled with profit taking after last week's strong uptick also contributed to the decline.

With a slew of economic events, including the U.S. Federal Reserve's monetary policy review scheduled for the week, investors are seemingly reluctant to pick up stocks.

Energy stocks declined sharply on the back of a report from Goldman Sachs that projected U.S. West Texas crude to drop to around $70 a barrel next year, anticipating excess supply from non-OPEC producers to outpace global demand. Goldman Sachs expects London's Brent at $80 a barrel during the second quarter of 2015.

The benchmark S&P/TSX Composite Index closed Monday at 14,469.00, down 74.82 points or 0.51 percent. The index scaled a intraday high of 14,525.95 and a low of 14,385.32.

On Friday, the index closed higher after some strong rally by Agrium offset sharp declines in the energy and mining sector, with some fairly stable new home sales data from the U.S.

Crude oil rallied to end flat after the dollar trended lower against a band of select currencies on some weaker than expected pending home sales data from the U.S., recovering from a $1.50 a barrel deficit intraday following Goldman Sachs' oil price forecast for next year.

The Energy Index plunged 2.77 percent, with U.S. crude oil futures for December delivery inching down $0.01 to close at $81.00 a barrel on the Nymex Monday.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) dropped 2.54 percent, Encana Corp. (ECA.TO) dropped 2.91 percent, Talisman Energy Inc. (TLM.TO) fell 4.37 percent, Cenovus Energy Inc. (CVE.TO) down 1.31 percent, Husky Energy Inc. (HSE.TO) slipped 1.63 percent, Bankers Petroleum Ltd. (BNK.TO) tumbled 8.89 percent, Canadian Oil Sands Limited (COS.TO) fell 4.21 percent, and Suncor Energy Inc. (SU.TO) shed 1.85 percent.

The Healthcare Index gained 0.17 percent, with Catamaran Corp. (CCT.TO) down 0.71 percent.

Valeant Pharmaceuticals Inc (VRX.TO) moved up 1.12 percent after the drug maker in a letter to Allergan Inc., expressed willingness to improved its takeover offer, providing at least US$200 a share to Allergan shareholders. Valeant previously offered US$72 in cash plus 0.83 of a Valeant share in June.

Gold futures ended lower ahead of the U.S. Federal Reserve's monetary policy decision later this week, with anticipation the central bank may not hike rates any time soon. A better-than-expected outcome of the stress test for banks in Europe also weighed on gold prices.

The Global Gold Index dropped 1.52 percent, with gold for December delivery dropping 2.50 or 0.2 percent to settle at $1,229.30 an ounce on the New York Mercantile Exchange Monday.

Among gold stocks, Agnico Eagle Mines Limited (AEM.TO) surrendered 1.83 percent, Goldcorp Inc. (G.TO) shed 1.16 percent, Kinross Gold Corp. (K.TO) moved up 0.33 percent, Yamana Gold Inc. (YRI.TO) fell 2.22 percent, Barrick Gold Corp. (ABX.TO) slipped 1.51 percent, and Eldorado Gold Corp. (ELD.TO) was down 1.28 percent.

The Capped Materials Index dropped 1.20 percent, with Potash Corp. of Saskatchewan Inc. (POT.TO) down 0.50 percent.

The heavyweight Financial Index dipped 0.03 percent with most major banks making gains. Toronto-Dominion Bank (TD.TO) added 0.61 percent, Canadian Imperial Bank of Commerce (CM.TO) moved up 0.66 percent, Bank of Montreal (BMO.TO) gained 0.45 percent, and National Bank of Canada (NA.TO) gathered 0.71 percent.

Among those declining, Royal Bank of Canada (RY.TO) edged down 0.26 percent and Bank of Nova Scotia (BNS.TO) slipped 0.06 percent.

The Diversified Metals & Mining Index shed 1.81 percent, as First Quantum Minerals Ltd. (FM.TO) dropped 1.84 percent, Lundin Mining Corp. (LUN.TO) fell 2.33 percent, and Teck Resources Limited (TCK.B.TO) surrendered 2.86 percent.

The Capped Industrials Index fell 0.43 percent, although Bombardier Inc. (BBD.B.TO) added 1.57 percent and Air Canada (AC.B.TO) was up 1.05 percent.

The Information Technology Index gained 1.10 percent, with smartphone maker BlackBerry Limited (BB.TO) adding 1.48 percent.

Among other tech stocks, Descartes Systems Group Inc. (DSG.TO) fell 1.00 percent, Open Text Corp. (OTC.TO) gained 0.22 percent, and Celestica Inc. (CLS.TO) added 0.60 percent, and CGI Group Inc. (GIB.A.TO) moved up 1.41 percent.

The Telecom Index advanced 0.37 percent with BCE Inc. (BCE.TO) adding 1.07 percent and TELUS Corp. (T.TO) gaining 0.83 percent. However, Rogers Communications Inc. (RCI.B.TO) dropped 0.90 percent.

The Consumer Staples Index added 1.04 percent, with Metro Inc. (MRU.TO) up 0.66 percent, Loblaw Companies Limited (L.TO) added 2.80 percent and Maple Leaf Foods Inc. (MFI.TO) was up 1.96 percent.

The Consumer Discretionary Index slipped 0.17 percent with Magna International Inc. (MG.TO) down 0.14 percent and Thomson Reuters Corporation (TRI.TO) up 0.53 percent.

Precision Drilling Corp. (PD.TO) plummeted 8.24 percent, despite reporting a higher profit of C$53 million or C$0.18 per share in the third quarter from C$29 million or C$0.10 per share a year ago.

Capital Power Corp. (CPX.TO) declined 3.29 percent after reporting a third-quarter net loss of C$45 million or C$0.62 per share, compared to net income of C$44 million or C$0.55 per share for the year-ago quarter.

In economic news from the U.S., a report from the National Association of Realtors showed a modest rebound in pending sales in the month of September. The NAR said its pending home sales index inched up by 0.3 percent to 105.0 in September after falling by 1.0 percent to 104.7 in August. Economists had been expecting pending home sales to increase by about 0.5 percent.

The focus is now on the U.S. Federal Reserve's monetary policy decision, due on Wednesday. It is widely speculated that the Fed may not start hiking interest rates any time soon.

Recent comments from Fed officials indicate a some support for maintaining their asset purchase program for another month, but most economists expect that policy makers will vote to fully wind down QE3.

In economic news from the eurozone, German business confidence deteriorated for the sixth consecutive month to the lowest since late 2012, falling more than expected to 103.2 in October, a survey carried out by the Ifo institute showed.

A Conference Board survey Monday showed the leading economic indicators index for the eurozone that reflect performance of the economy in the near term to have remained unchanged in September. The leading index remained flat month-over-month in September after the 0.6 percent drop in August.

Meanwhile, concerns about the health of eurozone banking industry have eased with none of the major banks failing the stress test by the European Central Bank.

The European Central Bank on Sunday published the results of a thorough year-long examination of the resilience and positions of the 130 largest banks in the euro area as of 31 December 2013. The assessment found a capital shortfall of 25 billion euros at 25 banks. Twelve of the 25 banks have already covered their capital shortfall by increasing their capital by 15 billion euros in 2014. The other banks will have up to nine months to cover the capital shortfall.

From Asia, India is set to for 5.6 percent growth in the fiscal year ending March 31, 2015, the World Bank said in a report on Monday. In its latest India Development Update, the lender predicted an acceleration in growth to 6.4 percent in fiscal 2016 and further to 7 percent in fiscal 2017.

The Federal Reserve is scheduled to announce its monetary policy decision on Wednesday. Investors also look ahead to data on durable goods orders, results of consumer sentiment surveys by the Conference Board and the Reuters and the University of Michigan this week.

Also due for release are advance third quarter GDP estimate, weekly jobless claims data, a report on service sector growth and a reading on Chicago region manufacturing activity.