News Column

Markets unnerved by air crash

July 17, 2014



Gold up, metals slides







The Toronto stock market was negative Thursday afternoon with traders largely avoiding risk in the wake of news that a Malaysian airliner with about 300 people on board crashed in Ukraine.

The S&P/TSX composite index fell into the red 22.83 points to close Thursday at 15,203.51, after a surge of 145 points on Wednesday.

The Canadian dollar slipped 0.13 cents to 92.96 cents U.S.

Still, the Canadian benchmark index has gained about 12% this year, driven by a rally in shares of oil and gas companies and gold miners.

The market had been positive for much of the morning in the wake of a strong earnings report from Canadian Pacific Railway.

Canadian Pacific posted second-quarter net income of $371 million, or $2.11 per diluted share, up 48% from a year ago and beating estimates by a penny and its shares ran up $3.48, or 1.8%, to $201.31.

CP's results also gave a lift to rival Canadian National Railways. Its shares gained 53 cents to $71.98 ahead of the release of its earnings on Monday.

The gold sector gained as Barrick Gold gained 35 cents, or 1.7%, to $20.63 and Goldcorp added 82 cents, or 2.8%, to $30.25

Loblaw Companies says Galen Weston will become president of the retailer as part of broader changes in its management structure. He replaces Vicente Trius effective immediately. Weston was formerly executive chairman of the company. Its shares were down 28 cents to $49.00.

Most TSX sectors turned lower with the energy sector off as oil prices continued to benefit from data released Wednesday showing a much larger than expected drawdown of U.S. inventories last week. Imperial Oil gave back 40 cents to $56.89, while Suncor shares stepped back 44 cents to $44.28

The metals and mining sector was lower even as September copper in New York rose one cent to $3.22 U.S. a pound. Teck Resources dipped 34 cents to $25.57.

On the economic front, Statistics Canada reported this morning that foreign investors bought up $21.4 billion of Canadian securities in May, most of them government bonds. Canadian investors added $2.0 billion of foreign securities to their holdings in the month, most of them non-U.S. instruments.

ON BAYSTREET

The TSX Venture Exchange slipped 3.60 points to 1,005.69.

All but three of the 14 Toronto subgroups were lower by Thursday's end. Global base metals trailed Thursday's close by 1.4%, energy by 1.3% and the metals and mining sector dropped 1.1%.

The three gainers were gold, up 2.3%, materials, charging ahead 1.2%, and industrials, up 0.3%.

ON WALLSTREET

A plane crash in Ukraine frightened markets Thursday.

The Dow Jones Industrials plummeted 161.39 points to 16,976.81.

The S&P 500 skidded 23.45 points to 1,958.12, and the NASDAQ composite tumbled 62.52 points to 4,363.45

What is known is that a Malaysian Airlines plan carrying 295 passengers went down in Ukraine near the Russian border. European markets heard the news just before their closing bells, and many ended the day down 1%. Gold is jumping up and U.S. markets are sliding as well.

Microsoft announced a staggering 18,000 job cuts to come this morning. The move signals that new CEO Satya Nadella means business about turning around the computing giant. Most of the cuts are coming from the Nokia brand, but some of the bleeding will come from Microsoft proper. The stock was up about 1.5%.

In other tech news, flash drive maker Sandisk took a 14% drop. The company flourished on earnings and revenue this quarter, but that wasn't enough to satisfy Wall Street. It said in an earnings release that it brought in a record $1.6 billion U.S. in revenue for the quarter, but its margins are shrinking.

Barbies and Hot Wheels aren't entertaining kids like they used to. Mattel saw tepid growth that was far less than Wall Street was expecting. The stock has fallen 7% so far today.

One bright spot for the company is American Girl doll sales, though it's a small part of the company's business.

After rejecting an $80-billion U.S. bid from Rupert Murdoch's Twenty-First Century Fox, Time Warner saw its 17% jump in yesterday's trading. Investors don't think that will be the end of things. The stock hiked another 2.9% today. Fox shares were flat.

Insurer UnitedHealth Group put out good results for the quarter, with earnings and revenue that beat expectations in all categories based on growth from all its business units and higher enrollments. The stock gained.6%.

A host of other insurance stocks are also up today. Humana was up 4.7%, Aetna was up 3% and WellPoint shares traded 2.3% higher.

Morgan Stanley, the last big American bank to report earnings this quarter, did better than Wall Street was expecting. It beat estimates for both earnings and revenue on the back of a strong performance from its units in stock trading and investment banking. The stock was down slightly.

Economically speaking, the U.S. Labor Department reported that initial claims for jobless aid decreased by 3,000 to a seasonally-adjusted 302,000 in the week ended July 12. That was less than the 310,000 figure forecast of economists surveyed by The Wall Street Journal.

Meantime, the number of housing starts and building permits issued in June declined 9.3% to a seasonally adjusted annual 893,000 million unit-pace, the lowest since September.That word from the Commerce Department.

Economists polled by Reuters had forecast starts rising to a 1.02 million-unit rate last month.

Prices for 10-year U.S. Treasuries gained ground, lowering yields to 2.48% from Wednesday's 2.54%. Treasury prices and yields move in opposite directions.

Oil prices shot up $1.85 to $103.05 U.S. a barrel.

Gold prices hiked $19.20 to $1,319.00 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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