News Column

Big board barely moves

June 23, 2014

Oil remains concern

Equities in Canada's biggest centre were fairly static on Monday as worries about political instability in Iraq and concerns about high valuations dragged on market sentiment, offsetting gains in the index's mining-heavy materials group.

The S&P/TSX composite index faded 3.34 points to end Monday at 15,105.63. Still, the benchmark index is up about 11% this year.

The Canadian dollar gathered 0.3 cents at 93.22 cents U.S.

Financials, eked ahead on the day, despite Toronto-Dominion Bank losing 19 cents to $54.52, though Bank of Nova Scotia picked up 29 cents to $71.19.

The materials sector, which includes mining stocks, gained some ground, helped by an increase in copper prices. First Quantum Minerals Ltd jumped -70 cents or 3.2% to $22.43.

In corporate news, Allergan Inc. advised investors not to sell their shares to Valeant Pharmaceuticals International, which launched a hostile takeover offer for the California-based Botox maker last week. Allergan said Valeant's offer was "grossly inadequate". Valeant shares fell $1.84, or 1.4% to $130.06.

Canadian engineering and construction company SNC-Lavalin Group said that it would acquire British energy services provider Kentz Corp for about 1.16 billion pounds ($1.98 billion) in cash. SNC's stock climbed 91 cents, or 1.7% to $53.31.

On the economic front, data showed the Chinese manufacturing sector moving into expansion territory. HSBC's purchasing managers' index hit a seven-month high at 50.8, the first time the index has moved above the 50 level since December.

However, other data showed that business activity in the euro-zone slowed for a second straight month in June. Data firm Markit said its composite purchasing managers' index for the euro-zone fell to 52.8 from 53.5 in May. Activity in Germany's private sector slowed slightly, but the main source of weakness for the euro-zone was once again France.


The TSX Venture Exchange dropped 2.39 points to 1,023.98

Eight of the 14 Toronto subgroups were higher Monday, with global base metals and gold helping show the way, each climbing 1.5%, while materials took on 1.1%.

The half-dozen laggards were held down by consumer discretionaries, off 0.7%, health-care, trailing Friday's close by 0.6%, and real-estate, 0.5% to the worse.


Stocks slid from their former record-breaking perches Monday.

The Dow Jones Industrials faded 9.82 points to greet the closing bell at 16,937.26

The S&P 500 deducted 0.26 points from Friday's all-time record to 1,962.61, but the NASDAQ composite inched forward 0.64 points to 4,368.68

Many still hope this could be the week the Dow cross the 17,000 mark for the first time, but it's not looking promising today. It's largely a psychological barrier, but it would be another point in the market's phenomenal bull run that saw the Dow close above 16,000 for the first time just seven months ago.

American Apparel board co-chairman Allan Mayer denied takeover rumors to Reuters, saying the company is not for sale. The retailer continues to deal with the fallout from firing its former CEO Dov Charney last week. Now Charney has fired back, writing a letter to the board challenging his dismissal.

The company is struggling to turn itself around. Shares are down about 2% for the day and continue to trade for less than $1.00 U.S.

Lululemon shares have bounced today after reports that the company's founder Chip Wilson hired Goldman Sachs to help him strengthen his role at the company, where he is the largest shareholder. Lululemon shares are up around 3%

Computer giant Oracle purchased MICROS Systems, one of its largest customers, for more than $5 billion U.S. Micros specializes in providing software applications to the hospitality and retail sectors, and has worked with Oracle for more than 15 years. Oracle shares are flat, and Micros stock is up more than 3%.

General Electric has finally closed the deal on French company Alstrom to the tune of $17 billion U.S., much more than its initial $13.5-billion U.S. bid. The French government had opposed the deal because it was concerned the merger would lead to job losses and a dilution of Alstom's French Brand. GE stock is down slightly, and Alstom's French shares closed more than 4% lower.

Wisconsin Energy announced this morning that it will acquire Integrys Energy Group for $71 U.S. per share in order to increase its natural gas business and its footprint in the Great Lakes region. Wisconsin's stock is down almost 3%, and Integrys shares have jumped almost 12.5% to around $68.50 U.S.

Crude oil prices rose Monday as investors worry about militants taking over large parts of Iraq. The country, which is a major oil producer, has been thrown into an intensifying conflict as members of the militant group ISIS battle with Iraq forces.

Things are looking up in the U.S. America's purchasing managers index came in above expectations and is pointing toward growth in the sector the second half of the year. Additionally, the Federal Reserve Bank of Chicago released an index of economic activity that also pointed toward growth.

The U.S. National Association of Realtors released data Monday showing that pace of May existing home sales rose to 4.89 million a year, which is above the market's expectations for an annual rate of 4.73 million.

Homebuilder stocks like Toll Brothers and PulteGroup were slightly positive. Lennar was slightly negative.

The NAR said that May's uptick, at nearly 5%, was the fastest month-to-month growth since August 2011.

Prices for 10-year U.S. Treasuries fell, raising yields back to Friday's 2.62%. Treasury prices and yields move in opposite directions.

Oil prices dipped nine cents to $106.08 U.S. a barrel.

Gold prices fell 20 cents at $1,318.20 U.S. an ounce.

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Source: Baystreet Stock Market Update (Canada)

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