News Column

Negative day for TSX

August 7, 2014



Base metals take pounding







Canada's main stock index took a dip on Thursday after upbeat U.S. jobless claims data was offset by market anxiety over the Ukraine crisis.

The S&P/TSX composite index tumbled 83.32 points to greet noon at 15,118.77.

The Canadian dollar slipped 0.04 cents at 91.56 cents U.S.

While the benchmark TSX index is still up nearly 12% since the start of the year, it has been in negative territory in four of the past five sessions.

Also weighing on the market, shares of Air Canada dropped 3.5% after the carrier reported quarterly results that missed expectations. Air Canada stock was grounded 76 cents, or 8.2%, to $8.50

The gold-mining sector recovered ground with the bullion price. Goldcorp gained 14 cents to $30.89, and Barrick Gold was up 13 cents at $20.18.


Financials climbed as they benefited from a gain in Manulife Financial Corp.

The insurer raised its dividend for the first time since the financial crisis and reported a quarterly profit that jumped on stronger financial markets. Manulife shares were down 27 cents at $21.70.

The health-care sector proved one of the few bright spots, as Extendicare gained 53 cents, or 7.2%, to $7.90.

On the economic front, Statistics Canada reported this morning that contractors took out building permits worth $8.0 billion in June, up 13.5% from May. The June hike was mainly due to higher construction intentions for institutional and industrial buildings in Quebec and commercial buildings in Alberta.

Moreover, Western University's Ivey Purchasing Managers Index (PMI) by the end of July 2014 stood at 54.1, compared to 46.9 in June, and 48.4 in July 2013.

ON BAYSTREET

The TSX Venture Exchange remained positive 3.91 points to 995.65

All but three of the 14 Toronto subgroups were down on the day, as global base metals fell 1.4%, metals and mining ditched 1.3%, and information technology lost 1.1%.

The three gainers were health-care, up 1.8%, gold up 0.2%, and utilities inching up 0.1%.

ON WALLSTREET

The major indices in the U.S. all started the day in positive territory, before dropping.

The Dow Jones Industrials dumped 75.07 points to 16,368.27

The S&P 500 subtracted 10.67 points to 1,909.57. The NASDAQ composite erased 20.08 points to 4,334.97.

Jack in the Box and Wendy's both reported their quarterly earnings, and the results are mixed. Jack in the Box, up 9%, surpassed expectations for revenue and earnings. A particularly bright spot is its burrito brand Qdoba, where Jack is squeezing more sales out of fewer stores.

Wendy's is up 2% after its results showed that sales were good but profits that weren't quite what Wall Street wanted. Both companies reported same-store sales growth, a sign that more people are coming into their stores. At Jack in the Box, Qdoba sales grew three times faster than the rest of the company.

Global sportswear giant Adidas reported quarterly results that fell just short of analyst estimates, with better sales numbers overall, but shrinking profits and margins. Notably, its TaylorMade and Adidas Golf sales are down more than a fifth from the same period last year. Adidas shares are down more than 4%.

Netlfix now has more subscriber revenue than HBO. Netflix CEO Reed Hastings wrote in a Facebook post yesterday: "They still kick our ass in profits and Emmy's, but we are making progress." Netflix shares were up 3%.

Shareholders are happy that Twenty-First Century Fox has squashed any potential deal to buy Time Warner. Rupert Murdoch reiterated Wednesday that the decision to walk away from the deal is "resolute."

Fox shares are 5.5% higher today, which is on top of the gains it registered when it first said it withdrew its $80-billion U.S. bid. Time Warner shares are down more than 2%.

U.S. government figures showed the number of Americans filing new claims for unemployment benefits fell unexpectedly last week.


In Ukraine, violence was at an elevated level a day after Russia announced plans to ban imports of food from the United States and fruits and vegetables from Europe in response to U.S. and European Union sanctions over Ukraine.

The announcement of potential military air drops in Iraq to counter an Islamic group might be spooking markets, as have a number of other geopolitical rumblings in recent days. The latest news about Russia's ban on foreign foods might also be having a small impact

Prices for 10-year U.S. Treasuries gained ground, lowering yields to 2.42% from Wednesday's 2.47%. Treasury prices and yields move in opposite directions.

Oil prices gained 73 cents to $97.65 U.S. a barrel.

Gold prices regained $5.30 to $1,313.50 U.S. an ounce.



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Source: Baystreet Stock Market Update (Canada)


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