TSX Ends Sharply Lower On Resource Stocks - Canadian Commentary

(RTTNews) - Canadian stocks snapped a three-day gain to end sharply lower Wednesday, with all major sub-indices in the red as commodity prices surged with investors awaiting the outcome of the upcoming U.S. Federal Reserve policy meet, anticipating the central bank to begin tapering its quantitative easing program soon. Investors also digested the budget deal reached by lawmakers in the U.S. that has averted a potential government shutdown next month.

U.S. lawmakers revealed details of a bipartisan budget agreement that would fund the government for the next two fiscal years. The deal places spending levels above the $967 billion cap established by the sequester and aims to reduce the deficit by $23 billion without raising taxes.

The S&P/TSX Composite Index closed Wednesday at 13,133.42 , down 190.59 points or 1.43 percent. The index scaled an intraday high of 13,324.09 and a low of 13,133.42.

Crude oil dropped sharply to end lower Wednesday, after the official Energy Information Administration's weekly report showed a significant, more-than-expected rise in U.S. gasoline stockpile last week, even as crude inventories recorded a massive drop.

Latest data from the EIA revealed that US crude oil inventories dipped 10.60 million barrels, while gasoline stocks gained 6.70 million barrels in the weekended December 06. Analysts expected crude oil inventories to fall by 3.0 million barrels and gasoline stocks to add 1.80 million barrels last week

The Energy Index shed 1.64 percent, with U.S. crude oil futures for January delivery, the most actively traded contract, dropping $1.07 or 1.1 percent to close at $97.44 a barrel Wednesday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) shed 1.34 percent and Suncor Energy Inc. (SU.TO) dropped 1.50 percent. Talisman Energy Inc. (TLM.TO) surrendered 2.55 percent.

Encana Corp. (ECA.TO) plunged 5.94 percent after projecting its full-year 2014 upstream operating cash flow, including hedging, to be between $3.0 billion and $3.2 billion. Ecana's natural gas production is expected to average between 2.6 billion cubic feet per day (Bcfd) and 2.8 Bcfd and total liquids production between 70 thousand barrels per day and 75 thousand barrels per day .

Hudson's Bay Company (HBC.TO) dived 5.95 percent after reporting a wider third quarter loss of C$124.2 million or C$1.04 per share compared with a loss of C$14.4 million or C$0.10 per share, a year earlier.

The Information Technology Index slipped 1.20 percent, with smartphone maker BlackBerry Limited (BB.TO) down 0.47 percent.

The Diversified Metals & Mining Index shed 1.24 percent, with First Quantum Minerals Ltd. (FM.TO) down 0.35 percent and Lundin Mining Corp. (LUN.TO) shedding 1.21 percent. Teck Resources Limited (TCK.B.TO) dived 3.44 percent..

The Capped Materials Index dived 2.38 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) losing 0.97 percent.

Gold futures snapped a two-day gain to end lower on Wednesday, after U.S. lawmakers struck a budget deal to avert a government shutdown next month. The precious metal climbed down from a three-week high with a two-percent surge yesterday, impacted by declining global equity markets and a sharp drop in imports from India, notwithstanding a weak dollar.

The Global Gold Index plunged 3.74 percent, with gold futures for February delivery, the most actively traded contract, dropping $3.90 or 0.3 percent to close at $1,257.20 an ounce Wednesday on the Nymex.

Among gold stocks, Kinross Gold Corp. (K.TO) plummeted 5.08 percent, while Barrick Gold Corp. (ABX.TO) shed 3.46 percent. Yamana Gold Inc. (YRI.TO) dropped 4.09 percent, while IAMGOLD Corp. (IMG.TO) plunged 5.79 percent.

Meanwhile, Roxgold Inc. (ROG.V) lost 10 percent after announcing it would acquire XDM Royalty Corp. in exchange of approximately 0.175 Roxgold common shares for every one common share of XDM which represents a deemed issue price of approximately $0.55 per Roxgold share.

The Financial Index slipped 1.16 percent with Bank of Montreal (BMO.TO) dropping 1.37 percent, while Royal Bank of Canada (RY.TO) surrendered 1.30 percent. The Bank of Nova Scotia (BNS.TO) dipped 0.97 percent, while Toronto-Dominion Bank (TD.TO) eased 0.81 percent.

The Capped Industrials Index dropped 1.84 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) down 2.81 percent.

In economic news from the eurozone, Germany's EU harmonized inflation increased in November as estimated earlier, final figures released by the Federal Statistical Office showed. Inflation as per the harmonized index of consumer prices rose to 1.6 percent in November from 1.2 percent in October. The November figure matched the preliminary estimates.

Meanwhile, the Asian Development Bank maintained a steady growth estimate for Asia, citing improving outlook in Japan and the United States paired with stronger-than-expected performance in China. The Manila-based ADB has forecast 6 percent growth for 45-member nations and 6.2 percent in 2014. The figures were in line with its estimate published in October.

The GDP outlook for People's Republic of China was increased by 0.1 percentage points to 7.7 percent in 2013 and 7.5 percent in 2014 on the back of rising infrastructure investment. India is forecast to grow 4.7 percent in fiscal year 2013 on the back of a rebound in exports and higher industrial and agricultural outputs. For 2014, growth in India is seen at 5.7 percent. Both estimates were left unchanged.

According to ADB, South Asia is on track to meet growth expectations of 4.7 percent in 2013 and 5.5 percent in 2014. However, Southeast Asia's growth was downgraded to 4.8 percent from 4.9 percent this year and to 5.2 percent in 2014 from 5.3 percent.