TSX Ends Lower On Falling Crude Prices, Soft Data -- Canadian Commentary

(RTTNews) - Canadian stocks snapped a six-day straight gain to end lower Wednesday, driven by declining energy stocks as crude oil prices dropped sharply and as well on some disappointing U.S. economic data, including a more than expected drop in housing starts.

Most European markets ended in positive territory, after some softening in the Greece's stand on its bailout fund program. U.S. markets turned recovered from an early move to the downside during the day, but the major averages were unable to sustain the upward momentum and ended roughly flat.

Reports from Europe say Greece plans to propose a four-month extension with the eurozone finance ministers for its current bailout program. However, Greece indicated it has no plans to honor the conditions of the loan program agreed to by the former government as part of the bailout assistance in 2012.

Crude oil prices tumbled amid speculation that recent gains have been overdone in light of the global supply glut. With the Organization of the Petroleum Exporting Countries refraining from cutting production, the low prices have disadvantaged many non-OPEC competitors, with producers in the U.S. and Canada forced to cut manpower and shelve major projects.

In some tepid economic news, U.S. producer price index fell more than expected with energy prices falling, the Labor Department said Wednesday, even as the subdued inflation remains an issue for the Federal Reserve.

Meanwhile, a Commerce Department report showed U.S. housing starts to have pulled back more than expected in January, after reporting a substantial rebound in new residential construction in the previous month.

A Federal Reserve report on Wednesday revealed industrial production in the U.S. to have increased modestly in January, but was short of what economists expected.

The benchmark S&P/TSX Composite Index closed Wednesday at 15,212.75, down 71.86 points or 0.47 percent. The index scaled an intraday high of 15,286.39 and a low of 15,178.04.

On Tuesday, the index closed up 19.80 points or 0.13 percent, at 15,284.61. The index scaled an intraday high of 15,339.46 and a low of 15,256.73.

The minutes of the Federal Reserve's most recent policy meeting showed the Fed was in no hurry to signal a possible interest rate hike in January meeting. However, that meeting took place prior to January's exceptionally strong jobs report was available, and a number of policy makers have since indicated a willingness to raise rates in June.

The Fed said information reviewed for the January 27-28 meeting showed economic activity expanded at a solid pace over the second half of 2014, and labor market conditions had again improved in recent months.

Crude oil ended lower as worries over a supply glut resurfaced ahead of the weekly official inventory data from the U.S. Energy Information Administration due Thursday.

The Energy Index dived 2.37 percent with U.S. crude oil futures for March delivery, tumbling $1.39 or 2.6 percent to settle at $52.14 a barrel on the New York Mercantile Exchange Wednesday.

Among energy stocks, Pacific Rubiales Energy Corp. (PRE.TO) slumped 6.29 percent, Canadian Oil Sands (COS.TO) shed 4.46 percent, and Encana Corp. (ECA.TO) fell 1.32 percent.

Canadian Natural Resources Limited (CNQ.TO) dipped 3.41 percent, while Crescent Point Energy (CPG.TO) dropped 2.29 percent and Suncor Energy (SU.TO) fell 1.69 percent.

Cenovus Energy (CVE.TO) fell 4.86 percent after the indicating plans to sell C$1.5 billion shares to fund spending amid the sharp drop in crude prices.

Talisman Energy (TLM.TO) gained 0.63 percent, while Penn West Petroleum Ltd. (PWT.TO) jumped 6.01 percent.

The Diversified Metals & Mining Index gained 1.65 percent, as Sherritt International Corp. (S.TO) gained 5.49 percent, First Quantum Minerals Ltd. (FM.TO) gathered 3.62 percent, Teck Resources (TCK-B.TO) moved up 2.0 percent, HudBay Minerals (HBM.TO) added 1.24 percent, and Finning International Inc. (FTT.TO) spiked 0.90 percent.

Gold futures ended at a more than seven-week low as the dollar trended higher and some soft U.S. economic data dented expectations of a Federal Reserve interest rate hike in June.

However, the Global Gold Index gained 2.63 percent, with gold for April delivery shedding $8.40 or 0.7 percent to settle at $1,200.20 an ounce on the New York Mercantile Exchange Wednesday.

Among gold stocks, Goldcorp Inc. (G.TO) added 2.55 percent, Barrick Gold Corp .(ABX.TO) gained 2.70 percent, and Kinross Gold (K.TO) gathered 3.29 percent.

Franco-Nevada (FNV.TO) jumped 5.12 percent, while Silver Wheaton (SLW.TO) gathered 2.94 percent. Yamana Gold (YRI.TO) gained 2.24 percent, while Agnico Eagle Mines (AEM.TO) moved up 2.46 percent.

The Capped Materials Index gained 1.72 percent, with Potash Corp. of Saskatchewan Inc. (POT.TO) adding 0.94 percent and Agrium Inc. (AGU.TO) down 0.58 percent.

The heavyweight Financial Index dropped 0.99 percent, as Bank of Montreal (BMO.TO) fell 0.84 percent, National Bank of Canada (NA.TO) shed 0.38 percent, Royal Bank of Canada (RY.TO) surrendered 1.17 percent, and Toronto-Dominion Bank (TD.TO) dived 1.71 percent.

Bank of Nova Scotia (BNS.TO) fell 1.45 percent, while Canadian Imperial Bank of Commerce (CM.TO) dropped 1.64 percent.

The Capped Industrials Index added 0.12 percent, with Bombardier Inc. (BBD.B.TO) edging down 0.40 percent and Air Canada (AC.TO) inched up 0.24 percent.

The Information Technology Index shed 0.25 percent, as BlackBerry Limited (BB.TO) gained 0.47 percent, Constellation Software (CSU.TO) dropped 0.14 percent, and Descartes Systems Group Inc. (DSG.TO) edged down 0.05 percent.

The Healthcare Index moved up 0.20 percent, as Valeant Pharmaceuticals International, Inc. (VRX.TO) gained 0.23 percent, Extendicare Inc. (EXE.TO) moved up 0.29 percent, and Catamaran Corp. (CCT.TO) added 0.08 percent.

The Capped Telecommunication Index inched up 0.09 percent, with BCE inching up 0.11 percent, TELUS Corp. (T.TO) gaining 0.11 percent, and Rogers Communications Inc. (RCI.B.TO) up 0.54 percent.

In economic news from the U.S., a Labor Department report showed producer prices fell much more than expected in January, reflecting another substantial decrease in energy prices. The producer price index for final demand slumped 0.8 percent in January after edging down by 0.2 percent in each of the two previous months. Economists expected the index to drop by 0.4 percent. This is the biggest monthly decrease since the final demand series began in November of 2009.

A Federal Reserve report on Wednesday showed industrial production in the U.S. to have increased modestly in January, partly reflecting a significant rebound in utilities output. Industrial production edged up by 0.2 percent in January after dipping by a revised 0.3 percent in December. Economists expected production to rise by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month.

A Commerce Department report on Wednesday showed U.S. housing starts to have pulled back more than expected in January, after reporting a substantial rebound in new residential construction in the previous month. Housing starts in January tumbled 2.0 percent to an annual rate of 1.065 million after jumping 7.1 percent to the revised December estimate of 1.087 million. Economists expected housing starts to fall by 1.7 percent to a rate of 1.070 million in January from the 1.089 million originally reported for the previous month.

U.S. mortgage applications tumbled last week as interest rates jumped, latest data from the Mortgage Bankers Association showed. Loan applications fell 13.2 percent for the week ended February 13. Refinancing dropped 14 percent, and in a sign that potential home buyers are extremely sensitive to interest rates, home purchase applications were down 7 percent.

Data from the Office for National Statistics on Wednesday showed the U.K. unemployment rate to have declined to its lowest in more than six years in the fourth quarter of 2014, while earnings increased more-than-expected and remained well above inflation. The jobless rate dropped to 5.7 percent during the October to December period, which is below the 6 percent recorded during the three months to September. Economists had forecast a jobless rate of 5.8 percent.

The Bank of Japan on Wednesday kept its monetary policy unchanged as expected, but lowered its inflation assessment after data showed earlier this week that the country exited recession. The bank voted 8-1 to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion. The bank also left its asset purchase policy unchanged.

Eurozone construction output declined for the second straight month in December, at a faster pace, data from Eurostat showed. Output in the construction sector fell 0.8 percent month-on-month in December, following a 0.5 percent drop in November, which was revised from a 0.1 percent decrease.