News Column

Toronto skids on euro-zone worries

January 31, 2014

Cameco, CNR in focus The Toronto stock market reached the midway point of the final day of January trading deep in the red amid worries about European deflation and emerging markets. The S&P/TSX composite index slid 68.42 points to greet midday at 13,666.86 The Canadian dollar forged its way out of negative territory and perked 0.29 cents to 89.89 cents U.S. Uranium miner Cameco is selling its share of the Bruce Power nuclear partnership in southwestern Ontario to Borealis Infrastructure for $450 million . Cameco shares were down 73 cents to $23.85 . TSX losses were paced by a fall in the industrials group after Canadian National Railway posted quarterly earnings of $635 million or 76 cents , missing estimates by a penny as results were impacted by tough winter conditions. CN also raised its quarterly dividend by 16% to 25 cents but its shares fell $1.31 to $58.03 . Nevertheless, RBC Capital Markets has raised its rating on CN stock to outperform and raised its price target by $2 to $66 per share, saying that 2014 is shaping up to be yet another record year for the railroad. The base metals sector stepped back as March copper lost three cents to $3.20 U.S. a pound. Teck Resources fell behind 49 cents from Thursday's close to $26.72 . In the energy sector, Imperial Oil sneaked ahead six cents to $45.58 . Eurostat, the EU's statistics office, reported that inflation in the euro-zone fell to 0.7% in the year to January from 0.8% the previous month. The data raised worries that the euro-zone could slip into a situation where prices are actually falling. Such deflation can hurt an economy as consumers delay purchases and businesses postpone investment. The deflation concerns added to emerging market worries that have buffeted markets this past week. On domestic economic matters, Statistics Canada reported that real gross domestic product grew 0.2% in November from October, up for a fifth consecutive month. The figure was 2.6% higher since November 2012 . ON BAYSTREET The TSX Venture Exchange slipped 6.15 points to greet noon at 946.73 All but two of the 14 Toronto subgroups remained in the red, weighed mostly by metals and mining stock, losing 1.8% of their steam, while global base metals tailed off 1.5%, and financials jettisoned 1%. The two gainers were in real-estate, inching up 0.3%, and utilities, clicking 0.1% brighter. ON WALLSTREET After snapping a five-day losing streak Thursday, stocks were down again Friday. The major indexes are all set to close out a bumpy first month of 2014 in the red. And the culprits once again were emerging market worries and weak earnings. The Dow Jones Industrial Average remained negative 101 points, well off its lows of the morning, to 15,747.61 The S&P 500 index subtracted 6.45 points to 1,787.74. The NASDAQ demurred 9.79 points to 4,113.34 The Dow is down more than 5% so far this year. That puts the blue-chip index on track for its worst January since 2009. The S&P 500 has slipped about more than 3% while the NASDAQ has shed almost 2%. On the earnings front, Mattel, Amazon, Chevron and MasterCard were all big losers on Friday after reporting results that underwhelmed investors. Mattel shares tumbled after the toy giant reported a surprise drop in its fourth-quarter revenue, as sales of its core brands Barbie and Fisher-Price fell sharply. Amazon missed Wall Street's earnings forecasts, sending shares sharply lower Wal-Mart shares were flat after the discount retailer cut its guidance for the fourth quarter. On the bright side, Zynga, Google and Chipotle were all higher following their earnings reports. Google and Chipotle each hit new all-time highs. But Zynga also announced a new round of job cuts. Microsoft shares ticked up slightly following a Bloomberg report that the company is preparing to name executive vice president Satya Nadella as its next CEO. Prices for 10-year U.S. Treasuries gained ground, dropping yields to 2.66% from Thursday's 2.69%. Treasury prices and yields move in opposite directions. Oil prices let go of 35 cents to $97.88 U.S. a barrel. Gold prices slipped into the red by 70 cents to $1,241.50 U.S. an ounce.

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Source: Baystreet Stock Market Update (Canada)

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