The Toronto stock market was lower Wednesday as telecom stocks dropped sharply amid a report of a potential new player in the Canadian wireless sector and pressure on gold miners as bullion prices retreated to three-year lows.
The S&P/TSX Composite Index slid 64.89 points to greet noon at 11,940.53
The Canadian dollar hiked 0.44 cents at 95.55 cents U.S.
The telecom sector declined after the Globe and Mail reported that Verizon Communications Inc. has made an initial offer for Wind Mobile and is starting talks with Mobilicity, two of Canada's smaller wireless network operators.
The Globe says two people familiar with the situation told it that Verizon's initial offer for Wind is worth about $700 million.
The potential for competition from a big American telecom punished the big Canadian telecoms, although most were off early lows.
Telus Corp. dropped $2.03, or 6.1%, to $31.34, Rogers Communications fell $3.63, or 7.9%, to $42.26, while BCE Inc. gave back $1.99, or 4.6%, to $41.33.
On the TSX, the gold sector was also down as speculation over what the Fed will do in tapering its $85 billion U.S. a month in bond purchases continued to pummel gold prices.
Barrick Gold fell 88 cents to $16.03.
Fed Chairman Ben Bernanke said last week that the pace of bond buying could slow later this year as long as economic data shows continued improvement. A string of solid economic data released Tuesday on manufacturing, housing and consumer sentiment has further reinforced the view that the central bank is ready to act and could wind up the program by next year.
The TSX gold sector is by far the worst performer on the Toronto market, down 46% so far this year. Share prices in gold miners were already feeling pressure as bottom lines were hit by rising costs. But gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies.
Transport giant Bombardier Inc. also dragged the TSX lower after the company announced that the first flight of its new CSeries jet has been delayed by a month to the end of July. Its shares fell 19 cents to $4.48.
The base metals sector was up with July copper down one cent at $3.06 U.S. a pound. Teck Resources gained 28 cents to $22.22.
The consumer staples sector was the strongest component, up one per cent as grocer Loblaw Cos. rose 77 cents to $47.54.
Bank stocks were also supportive with Royal Bank ahead 59 cents to $60.74.
ON BAYSTREET
The TSX Venture Exchange erased 12.16 points to 870.20
Of the 14 Toronto subgroups, nine were lower, as telecoms were down 5.5%, gold was off 5.2%, and materials weakened 2.5%.
The five gainers were led by consumer staples, up 1.1%, information technology, prospering 1%, and consumer discretionary issues, ahead 0.7%.
ON WALLSTREET
U.S. stocks rose sharply Wednesday as investors bet the weak GDP reading would keep the Fed's stimulus going.
The Dow Jones Industrials added 108.61 points to break for lunch at 14,868.90
The S&P 500 index gained 10.48 points to 1,598.51. The tech-rich NASDAQ Composite jumped 25.38 points to 3,373.27
Concerns about a cash crunch in China also eased after China's central bank pledged to provide any necessary liquidity to the country's financial institutions
Gold prices fell more than 4% to a 34-month low, before trimming some of those losses.
Gold has been dragged down by the market rout accompanying Fed Chairman Ben Bernanke's comments about potentially pulling back on bond buying later this year.
Gold mining companies Randgold Resources and Barrick Gold fell 4% in early trading. The SPDR Gold Shares Trust ETF fell 3%.
In corporate news, shares of Smith & Wesson declined even after the gun maker issued earnings and sales guidance well above forecasts.
General Mills slipped after the food company reported earnings in line with forecasts but a weak guidance for the year.
Shares of Apollo Group, which owns for-profit University of Phoenix, slid after the company reporting disappointing quarterly profits.
Monsanto reported better-than-expected earnings and reiterated its outlook, but shares turned lower. Bed Bath & Beyond will report after the markets close.
Pandora shares gained ground after analysts at Cowen and Co. upgraded the company's shares to outperform.
Markets have been volatile lately, driven largely by fears that the Federal Reserve could begin to ease its stimulus measures by the end of the year.
But those fears took a backseat following the U.S. Commerce Department's worse-than-expected report on first-quarter gross domestic product, which showed the economy grew just 1.8% during the first quarter. The prior estimate showed an annual increase of 2.4%, and economists were expecting that figure to hold.
Prices for the 10-year U.S. Treasury remained positive, lowering yields to 2.57% from Tuesday’s 2.59%. Treasury prices and yields move in opposite directions.
Oil prices dipped three cents to $95.29 U.S. a barrel.
Gold prices collapsed $39.80 to $1,235 U.S. an ounce.
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