TSX Ends Lower As Commodities Tumbles -- Canadian Commentary

(RTTNews) - Canadian stocks ended lower Wednesday, on plunging commodity prices and declining U.S. equity markets, as concerns over possibilities of a rate hike by the Federal Reserve continued to worry investors. The majority of the Canadian sectors ended in the red, led by energy and gold stocks.

The strong performance of the Asian markets overnight, particularly the 7.7 percent surge in Japan's NIKKEI 225, sparked a sharp gain at the open. China's Shanghai Composite Index jumped by 2.3 percent, adding to the 2.9 percent gain posted in the previous session. The continued strength among Chinese stocks is attributed partly to optimism that the government will take additional steps to support the economy.

The Bank of Canada kept interest rates unchanged at 0.5 percent, in line with expectations. The central bank had lowered its rate in July and again in January.

The consumer price inflation remained near the bottom of the target range, reflecting year-over-year price declines for consumer energy products, the statement showed.

Meanwhile, the bank judged it prudent to have stimulative effects of previous monetary policy to work their way through the Canadian economy.

"Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada's economy," it noted.

Markets in Europe ended firmly in the green, although the early strength from the strong performance in Asia eroded a little. U.K. industrial and manufacturing output also logged an unexpected decline in July.

Early gains in the United States receded, with most major averages ending in the red after a Labor Department report showed job openings jumped to a record of 5.75 million in July, from 5.32 million in June. The upbeat numbers has once again set off speculation of an immediate rate hike by the Federal Reserve.

Economic data in the U.S. otherwise remains sparse and will remain so until Thursday, with investors now focused on the Federal Reserve policy meeting next week.

The benchmark S&P/TSX Composite Index closed Wednesday at 13,531.85, down 98.82 points or 0.72 percent. The index scaled an intraday high of 13,766.65 and a low of 13,516.99.

On Tuesday, the index closed up 152.36 points or 1.13 percent, at 13,630.67. The index scaled an intraday high of 13,509.95 and a low of 13,414.58.

The Diversified Metals & Mining Index inched up 0.31 percent on Wednesday, after having plummeted 8.76 percent yesterday. First Quantum Minerals (FM.TO) plunged 5.51 percent, after having surged 22.90 percent yesterday.

Teck Resources Limited (TCK-B.TO) jumped 5.90 percent, after having gained 5.98 percent yesterday.

HudBay Minerals Inc. (HBM.TO) dropped 2.51 percent, while Sherritt International Corp. (S.TO) gained 0.95 percent.

Capstone Mining (CS.TO) fell 2.94 percent, after lowering its 2015 operating mine site capital expenditures relative to previous guidance by approximately $20 million. Capstone also indicated plans to reduce mine site operating costs by $20 million in the second half of the year and suspended work on the Santo Domingo project.

The heavyweight Financial Index dropped 0.36 percent, as Bank of Montreal (BMO.TO) fell 0.35 percent, National Bank of Canada (NA.TO) dipped 0.12 percent, and Royal Bank of Canada (RY.TO) inched up 0.01 percent.

Toronto-Dominion Bank (TD.TO) dropped 0.13 percent, Bank of Nova Scotia (BNS.TO) fell 0.97 percent, and Canadian Imperial Bank of Commerce (CM.TO) shed 0.41 percent.

Crude oil plunged to end at a near two-week low for a third straight session Wednesday, as the Energy Information Administration slashed its crude oil price forecast for the year.

The Energy Information Administration in its monthly report indicated WTI prices to average $49.23 a barrel this year, which is down from a prior forecast of $49.62. The EIA also lowered its forecast for 2016 to $53.57 a barrel from the previous projection of $54.42.

The Energy Index plunged 2.14 percent, with U.S. crude oil futures for October delivery, the most actively traded contract, plummeting $1.79 or 3.9 percent, to settle at $44.15 a barrel on the New York Mercantile Exchange Wednesday.

Among energy stocks, Crescent Point Energy Corp. (CPG.TO) fell 0.97 percent, Canadian Natural Resources Limited (CNQ.TO) shed 2.51 percent, and Cenovus Energy (CVE.TO) fell 1.11 percent.

Encana Corp. (ECA.TO) moved up 0.98 percent, after providing its mid-third quarter update..

Suncor Energy Inc. (SU.TO) surrendered 1.05 percent, while Canadian Oil Sands (COS.TO) dropped 3.06 percent.

Gold futures ended sharply lower as investors turned to the riskier equity assets as global stocks rebounded and the dollar trended higher against some major currencies.

The Gold Index dropped 2.89 percent, with gold for December delivery plunging $19.00 or 1.7 percent, to settle at $1,102.00 an ounce on the New York Mercantile Exchange Wednesday.

Yamana Gold Inc. (YRI.TO) plunged 5.02 percent, while IAMGOLD Corp. (IMG.TO) gained 0.99 percent. Barrick Gold (ABX.TO) plunged 3.60 percent, Kinross Gold Corp. (K.TO) dropped 2.87 percent, and Eldorado Gold (ELD.TO) fell 1.63 percent.

The Capped Materials Index fell 1.63 percent, as Agnico Eagle Mines Limited (AEM.TO) fell 4.67 percent, Agrium Inc. (AGU.TO) gained 0.65 percent, and Potash Corp. of Saskatchewan Inc. (POT.TO) ended flat at $33.81 a share.

The Capped Health Care Index shed 1.57 percent, as Valeant Pharmaceuticals International (VRX.TO) fell 1.58 percent, Extendicare Inc. (EXE.TO) dropped 0.98 percent.

Concordia Healthcare Corp. (CXR.TO) slipped 1.60 percent.

The Capped Information Technology Index slipped 1.12 percent, as BlackBerry Limited (BB.TO) fell 1.74 percent and Descartes Systems Group (DSG.TO) climbed 1.28 percent.

The Capped Telecommunication Index dropped 0.63 percent, as Rogers Communication (RCI-B.TO) shed 2.03 percent, BCE Inc. (BCE.TO) dipped 0.33 percent, and TELUS Corp. (T.TO) surrendered 0.14 percent.

Sandvine (SVC.TO) tanked 13.33 percent, after estimating revenue for its third quarter to be approximately $27 million.

The Capped Industrials Index added 0.70 percent, as Bombardier (BBD-B.TO) surged 22.69 percent, on reports that it has rebuffed a Chinese offer to buy up to 100% of its rail business.

Finning International Inc. (FTT.TO) dropped 0.14 percent, while Air Canada added 1.83 percent.

Canadian Pacific Railway (CP.TO) gained 0.26 percent, after it announced a $1.2 billion debt offering.

Goldcorp (G.TO) shed 4.05 percent, after lowering its production guidance from Éléonore mine, after higher than expected folding was being encountered.

Enghouse Systems Limited (ESL.TO) dropped 0.47 percent, after announcing the acquisition of Stockholm, Sweden -based Aktavara AB.

On the economic front, the Canada Mortgage and Housing Corp. reported Wednesday morning that Canadian housing starts increased by 12.2 percent in August, to an annual rate of 216,924 units. Economists had been expecting an increase to an annual rate of 190,500 units.

Statistics Canada also reported that Canadian building permits declined by 0.6 percent in July to C$7.74 billion. Building permits had surged by 15.5 percent in June. Economists had expected building permits to fall by 5.0 percent in July.

U.K. industrial production dropped unexpectedly and the visible trade gap widened to the highest level in a year in July largely due to a strong pound, suggesting a weak start to the third quarter.

Industrial output dropped 0.4 percent on a monthly basis in July, having had an equivalent fall in the prior month, the Office for National Statistics said Wednesday. Economists had forecast 0.1 percent growth for July. This was the second consecutive fall in production.

UK visible trade deficit widened for a second straight month in July to its biggest level in a year, exceeding economists' expectations, figures from the Office for National Statistics showed Wednesday. The deficit in the trade in goods rose to GBP 11.082 billion from GBP 8.507 billion in June. Economists had forecast a GBP 9.5 billion shortfall.

British shop prices declined for the twenty-eighth consecutive month in August, defying expectations for a slower drop, the British Retail Consortium said on Wednesday. Shop prices fell 1.4 percent year-over-year in August, the same rate of decrease as in the previous month. Economists had forecast only a 0.2 percent drop for the month.