10.03.2015 22:23:07

TSX Ends Sharply Lower As Global Equity Markets Decline -- Canadian Commentary

(RTTNews) - Canadian stocks ended sharply lower on Tuesday, tracking plunging global equity markets amid worries over the impending interest rate hike by the U.S. Federal Reserve, which is expected sooner rather than later.

Almost all major sub-indices of the TSX ended in negative territory with the exception of the Utility Index.

Markets were also spooked by some weak data from China amid growing concerns over Greece's financial woes and the U.S. dollar surging against the euro. Weakness in commodity prices also contributed to the global sell-off.

Markets in Europe ended firmly in the red Tuesday, following a meeting of eurozone finance ministers on Monday over Greece's reform measures. Eurogroup President, Dutch Finance Minister Jeroen Dijsselbloem expressed frustration with Greece and accused the country of wasting time.

"My key message today was that we have spent now two weeks apparently discussing who meets whom where, in what configuration and on what agenda and it's a complete waste of time," Dijsselbloem said.

"I cannot be explicit enough about it. That's why we've said we've talked about this long enough now," he added. "We only have four months…let's get it done."

Greece will resume talks with lenders in Brussels on Wednesday. Greece repaid EUR 310 million as the first tranche of a loan to the International Monetary Fund on Friday. Athens has to pay a total EUR 1.5 billion to the IMF over the next two weeks.

Markets in the United States also ended deeply in the red, with Wall Street weighed down by weakness in overseas markets.

Ongoing concerns about the outlook for U.S. interest rates has also generated some negative sentiment ahead of the Federal Reserve's monetary policy meeting next week. While the Fed is not expected to raise interest rates at the meeting, recent upbeat jobs data may lead the central bank to signal that a rate hike is on the horizon.

The benchmark S&P/TSX Composite Index closed Tuesday at 14,641.76, down 212.73 points or 1.43 percent. The index scaled an intraday high of 14,784.72 and a low of 14,627.97.

On Monday, the index closed down 98.01 points or 0.66 percent, at 14,854.49. The index scaled an intraday high of 15,964.60 and a low of 14,854.49.

Gold futures ended at a near four-month low after the dollar surged to fresh 12-year highs against the euro. A stronger dollar and low inflation has diminished the appetite for gold.

The Gold Index shed 1.33 percent, with gold for April delivery dropping $6.40 or 0.6 percent to settle at $1,160.10 an ounce on the New York Mercantile Exchange Tuesday.

Among gold stocks, Goldcorp (G.TO) dropped 1.11 percent and Kinross Gold Corp (K.TO) shed 2.97 percent. Eldorado Gold Corp. (ELD.TO) dropped 0.34 percent, Yamana Gold Inc. (YRI.TO) fell 5.92 percent, B2Gold (BTO.TO) surrendered 2.12 percent, and IAMGOLD (IMG.TO) plunged 5.00 percent.

The Capped Materials Index dived 1.93 percent on declining gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) shedding 1.81 percent and Agrium Inc. (AGU.TO) down 0.78 percent.

Franco-Nevada (FNV.TO) fell 1.84 percent, while Agnico Eagle Mines (AEM.TO) slipped 0.06 percent. Silver Wheaton (SLW.TO) dropped 1.03 percent.

Crude oil plummeted to end sharply lower as the dollar spiked against some major currencies and ahead of the official weekly oil report from the Energy Information Administration, which is expected to show a ninth straight week of increase in inventories.

The Energy Index fell 1.35 percent, with U.S. crude oil futures for April delivery, plunging $1.71 or 3.4 percent to settle at $48.29 a barrel on the New York Mercantile Exchange Tuesday.

Among energy stocks, Canadian Oil Sands Limited (COS.TO) plunged 6.59 percent, Suncor Energy Inc. (SU.TO) shed 1.14 percent, Canadian Natural Resources Limited (CNQ.TO) dropped 0.84 percent, and Encana Corp. (ECA.TO) dipped 2.36 percent.

Crescent Point Energy Corp. (CPG.TO) dropped 1.25 percent, while Cenovus Energy Inc. (CVE.TO) slipped 0.91 percent.

The heavyweight Financial Index fell 1.71 percent, with Bank of Nova Scotia (BNS.TO) down 2.97 percent, Bank of Montreal (BMO.TO) slipping 1.46 percent, and Royal Bank of Canada (RY.TO) down 1.61 percent.

National Bank of Canada (NA.TO) dipped 2.35 percent, while Canadian Imperial Bank of Commerce (CM.TO) shed 2.44 percent. Toronto-Dominion Bank (TD.TO) dropped 1.88 percent.

The Diversified Metals & Mining Index plunged 3.41 percent, as First Quantum Minerals Ltd. (FM.TO) plunged 7.06 percent, Lundin Mining Corp. (LUN.TO) shed 3.74 percent, and Teck Resources (TCK-B.TO) surrendered 2.73 percent.

Sherritt International Corp. (S.TO) dropped 4.63 percent, while HudBay Minerals Inc. (HBM.TO) shed 2.08 percent.

Finning International Inc. (FTT.TO) dived 3.79 percent, after announcing the appointment of Steven Nielsen as its chief financial officer.

The Health Care Index slipped 0.21 percent, as Extendicare Inc. (EXE.TO) fell 0.70 percent, Valeant Pharmaceuticals International, Inc. (VRX.TO) shed 0.85 percent, and Catamaran Corp. (CCT.TO) gaining 1.28 percent.

The Capped Industrials Index fell 1.35 percent, with Bombardier Inc. (BBD.B.TO) dropping 1.67 percent and Air Canada (AC.TO) slipping 0.73 percent.

Canadian Pacific Railway (CP.TO) declined 0.75 percent, after having announced on Monday that Unifor members have ratified a labor agreement covering about 1,200 active mechanical employees.

The Information Technology Index dropped 1.96 percent, with BlackBerry Limited (BB.TO) slipping 0.56 percent. The smartphone maker was downgraded to "Sell" from "Neutral" by Goldman Sachs a day before.

Among other tech stocks, Sierra Wireless, Inc. (SW.TO) dropped 1.49 percent, Constellation Software Inc. (CSU.TO) fell 2.08 percent, and Descartes Systems Group Inc. (DSG.TO) shed 2.38 percent.

The Capped Telecommunication Index fell 1.19 percent, with Rogers Communications Inc. (RCI.B.TO) dropping 0.56 percent, BCE shedding 0.84 percent and TELUS Corp. (T.TO) shed 1.97 percent.

Westport Innovations (WPT.TO) tanked 15.88 percent, after having reported a fourth quarter loss of $1.02 per share, compared to the loss of $1.42 last year.

Hudson's Bay Company (HBC.TO) dropped 1.30 percent, after having declared a quarterly dividend of $0.05 per share.

On the economic front, wholesale inventories in the U.S. increased more than expected in January, a report from the Commerce Department showed Tuesday, with the report also indicating a sharp drop in wholesale sales. Wholesale inventories edged up by 0.3 percent in January after coming in nearly unchanged in December. Economists expected inventories to inch up by just 0.1 percent.

China's inflation accelerated more than expected from a five-year low in February, but producer prices declined the most since late 2009, underscoring the persistent risk of deflation. Inflation rose to 1.4 percent in February from 0.8 percent in the prior month, data from the National Bureau of Statistics showed Tuesday. It was forecast to increase moderately to 1 percent.

Separately, the National Bureau of Statistics said producer prices declined for the 36th consecutive month in February weighing heavily on profit margins of companies. Industrial producer prices were down 4.8 percent from last year, which was bigger than a 4.3 percent fall seen a month ago. Economists had forecast prices to fall by 4.3 percent. This was the biggest fall since October 2009.

French industrial production grew unexpectedly in January from the prior month, statistical office Insee said Tuesday. Industrial production rose 0.4 percent month-on-month, defying expectations for a 0.3 percent fall. This was the second consecutive rise in output. Nonetheless, the rate of growth was weaker than the revised 1.4 percent expansion seen in December.

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