The Toronto stock market turned slightly positive by the end of the session Tuesday, as stocks moved lower on worries about an economic downturn despite reassuring words on the American economy from the head of the Federal Reserve.
The S&P TSX Composite Index forged ahead 12.44 points to close at 11,517.18
The TSX had started off positive after U.S. Federal Reserve chairman Ben Bernanke said Monday night that he is hopeful the world’s number-one economy will gain traction and not fall back into a "double-dip" recession. Bernanke added that he expects a continued recovery, but "it won’t feel terrific." He added that he believes European leaders are taking the right steps to control rising deficits.
Instead, investors focused on fears that a European debt crisis will grow, that a slowing Chinese economy means less demand for the commodities that support the resource-heavy TSX and poor jobs data from the U.S. last week.
The TSX financials sector was a big weight on the market, as Manulife Financial lost 17 cents to $16.76 while TD Bank dropped 19 cents to $69.75.
The group has been under pressure for the last two weeks, since TD, Royal Bank and CIBC reported earnings that missed some analyst forecasts.
But also "there’s heightened concern about what lower equity markets mean for the insurance companies and the banks, and if there is some sort of backup in credit spreads, what does that mean for these businesses," according to at least one expert.
Among energy issues, Suncor Energy moved upward 16 cents to $31.95, but Canadian Oil Sands Trust shed 19 cents to $26.88.
The base metals sector was up a bit, while the July copper contract was unchanged at $2.76 U.S. a pound. Copper has plunged about 24% since mid-April as investors worry about economies going back into recession. Teck Resources was up $1.59 to $32.73 while First Quantum Minerals lost $1.38 to $50.03.
Investors looking for a safe haven continued to push gold prices higher. Barrick Gold Corp. faded 32 cents to $45.49 and Kinross Gold Corp. improved by six cents to $18.26.
In corporate news, shares in Maple Leaf Foods were 25 cents lower to $9.26 after the Globe and Mail reported that the Ontario Teachers’ Pension Plan is planning to sell its 35.3% stake in the food company. The stake is worth about $450 million, represents one of Teachers’ largest public-company investments and was its largest single holding of a listed company in Canada as of Dec. 31.
Goldcorp Inc. shares were down 47 cents to $46.40 after the miner was ordered to close its Marlin mine in Guatemala by the Inter-American Commission on Human Rights. It has called on the project to be shut pending an investigation into alleged human rights abuses and environmental problems.
Goldcorp hasn’t had a formal indication from the government on how it will respond to the ruling, which was issued on May 20 and reportedly requires Guatemala to comply within 20 days.
Russian state-owned uranium mining company JSC Atomredmetzoloto will take controlling stock interest in Vancouver-based Uranium One Inc. in exchange for interests in two southern Kazakhstan uranium mines. Uranium One is to issue 356 million new common shares, worth about $932.7 million at its most recent price, to the Russian firm for stakes in Akbastau and Zarechnoye joint ventures and $610 million U.S. in cash.
Uranium One shares fell nine cents to $2.53.
TransAlta Corp. shares moved down 17 cents to $20.53 after it said Monday it has declared force majeure after a problem at its 353-megawatt Sundance 3 thermal power plant in Wabamun, Alta. The company said there was a mechanical failure of generator components at the power plant, which is expected to be back in service by June 20, running at a reduced capability of about 330 MW. The company said it does not expect the break down to have a material impact on its full year net income.
Bombardier Inc. shares regained three cents to $4.50 after the company received a certificate of air worthiness from Transport Canada for the first of four Global 5000 jets to be operated by the German defence ministry.
TG World Energy Corp. shares jumped eight cents or 72.7% to 19 cents in heavy trading on the TSX Venture Exchange after the company said it was notified by the project operator at its Tindalo-1 well in the Philippines that production testing is complete. Tindalo-1 well has a maximum flow rate of 18,689 barrels of oil per day.
In economic news, Canada Mortgage and Housing Corporation said the seasonally adjusted annual rate of housing starts was 189,100 units in May, down from a revised 201,800 units in April.
Economists were expecting housing starts to rise to 206,000.
The Canadian dollar picked up 1.18 cents to 95.47 cents U.S.
ON BAYSTREET
Of the 14 TSX subgroups, nine were in plus country, led by global base metals, ahead 2.8%, metals and mining, up 1.4%, and information technology, 0.3% to the good.
The five laggards were weighed by health-care stocks, down 1.3%, telecoms, off 0.8% and consumer staples, sliding 0.5%.
The TSX Venture Exchange stumbled 2.83 points to 1,450.59, while the Nasdaq Canada index moved 13.46 points higher to 663.64.
ON WALLSTREET
In New York, stocks staged a comeback late Tuesday, with the Dow and S&P 500 rallying near the end of a choppy session, following a surge in commodity and financial shares.
The Dow Jones industrial average raced ahead in the final hour of trading, to gain 123.49 points, or 1.3%, to close at 9,939.98
The S&P 500 index prospered 11.53 points to 1,062. The Nasdaq composite index moved back, though, 3.33 points, to 2,170.57.
Stocks churned in the morning, as investors weighed Federal Reserve Chairman Ben Bernanke's positive comments about the economy with continued fears about the global outlook. But by the early afternoon, the Dow and S&P had turned higher as investors eyed the rising euro and a rally in commodities.
The Federal Reserve Chairman said at an event Monday night that he doesn't expect the U.S. economy to fall back into a recession again. In addition, he said that the steps European leaders were taking to control rising deficits were helping.
The euro rose 0.1% versus the dollar after churning in the morning and touching a four-year low of $1.188 U.S. Monday. The dollar fell 0.1% against the yen.
The direction of the euro tends to be taken as a proxy for worries about the European debt crisis and its impact on the global economy. Hungary's debt has become the latest concern for investors, adding to ongoing worries about Greece, Spain and the other so-called PIIGS nations -- Italy, Ireland and Portugal.
McDonald's reported that sales at stores open a year or more rose 4.8% worldwide and 3.4% in the United States as consumers continued to buy its fast food. The company has reported rising sales in the United States for four months straight.
However, the Dow component warned that full-year profits would be hurt by the impact of the weak euro. Big multi-nationals such as McDonald's benefit from a strong euro as foreign sales convert back to more U.S. dollars. Shares rose 2%.
BP and Transocean shares slumped in the ongoing fallout from the oil spill in the Gulf. On Monday, BP said it was having some success with its latest attempt to stop the flow of oil following the explosion and sinking of the Deepwater Horizon rig. But investors remained wary after published reports looked at the slim, but possible risk of bankruptcy for BP in the wake of the disaster.
The rig was operated by Transocean and contracted to work on an oil well leased by BP.
But other energy-sector stocks rallied, including Exxon Mobil, Schlumberger and ConocoPhilips.
Exxon Mobil is a Dow stock. Other big Dow gainers included Boeing, Caterpillar, DuPont and Procter & Gamble.
A variety of big tech shares fell, including Intel, eBay, Oracle and Microsoft.
Treasury prices gained a bit, lowering the yield on the 10-year note to 3.17% from Monday’s 3.18%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil improved 75 cents to $72.19 U.S.
Gold prices stumbled five dollars to $1,239 U.S. an ounce
Related Stories
