News Column

TSX slips midday

June 23, 2014



Valuation concerns, Iraq, downward factors







Equity markets in Toronto fell 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 31.39 points to greet noon at 15,077.58. Still, the benchmark index is up about 11% this year.

The Canadian dollar gathered 0.25 cents at 93.18 cents U.S.

Financials moved lower, with Toronto-Dominion Bank losing 0.5% to $54.52 and Bank of Nova Scotia falling 0.1% to $70.83.


The materials sector, which includes mining stocks, advanced helped by an increase in copper prices. First Quantum Minerals jumped 1.4% to $22.03.


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 1.2% to $130.34.


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 1.8% to $53.35.

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 eurozone was once again France.

ON BAYSTREET

The TSX Venture Exchange dropped 1.97 points to 1,024.40

Nine of the 14 Toronto subgroups were lower by noon hour ET. Consumer discretionary dipped 0.9%, health-care stocks shed 0.7%, and real-estate stocks fell 0.6%.

The five gainers were led by gold, up 1.2%, global base metals, up 1.1%, and materials, up 0.9%.

ON WALLSTREET

Stocks continue to slide, amid the Iraq situation and valuation concerns.

The Dow Jones Industrials faded 38.90 points to pause for lunch at 16,908.18

The S&P 500 deducted 3.13 points from Friday's all-time record to 1,959.74, and the NASDAQ composite ducked back 0.11 points to 4,367.93

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.

Lululemon shares are bouncing this morning after the Wall Street Journal reported 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 3.5%

American Apparel shares are flat on rumors that the company make be a potential takeover target. It's the latest twist impacting the brand. Last week the company fired controversial CEO Dov Charney. Now Charney has fired back, writing a letter to the board challenging his dismissal. The company continues to struggle with its turnaround plan. The stock is trading for less than $1.00 U.S.

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 1%, and Alstom's French shares closed about 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 around 2%, and Integrys shares have jumped over 13% to nearly $70 U.S.

BNP Paribas is on the cusp of a $9-billion settlement with the U.S. Justice Department on allegations that it did business with off-limits countries. The French bank's shares are flat at the moment. There are fears that the fine could hurt BNP's credit rating.

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, PulteGroup and Lennar and all positive.

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 were higher, lowering yields to 2.60% from Friday's 2.62%. Treasury prices and yields move in opposite directions.

Oil prices slipped 78 cents to $106.05 U.S. a barrel.

Gold prices slumped $1.20 at $1,315.40 U.S. an ounce.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Baystreet Stock Market Update (Canada)


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