Toronto's main stock index retreated on Tuesday after Monday's broad rally, as a shock contraction in the struggling U.K. economy fanned fears about the pace of the global recovery and commodity prices fell.
The S&P/TSX composite index fell 87.95 points Tuesday to close at 13,259.63
The Canadian dollar slid 0.38 cents to 100.2 cents U.S.
Prices for oil and metals such as copper were hit by a double-whammy of the weak GDP data from Britain and by worries that monetary tightening in Asia could curb the appetite for commodities in those growing economies.
As well, gold slid to near a three-month low as safe-haven demand evaporated and investors booked further profits from the 2010 rally.
Among the biggest decliners were Canadian Natural Resources, off 1.9% at $41.36, and Teck Resources, which skidded 1.2% to $59.10.
Financials, however, were a tad firmer, supported by a report that some of the country's biggest banks have drawn up "living wills" showing how they would be dismantled in a crisis without the need for a government bailout.
On the domestic earnings front, Canadian National Railway dropped 1.1% to $67.71, as its underlying profit rose slightly less than expected due to higher fuel and other expenses, eating
into a revenue gain.
Baffinland Iron Mines shares were flat at $1.49 after a majority of shareholders tendered to a $590-million takeover offer by ArcelorMittal Nunavut Iron to gain access to the miner's massive Arctic iron ore deposit.
Suncor fell 1.8% to $37.61. Cenovus Energy Inc., Canada’s number-five energy company by revenue, declined 2.7% to $31.45.
Zinc dropped for a ninth day -- the longest streak of losses in at least 22 years -- and copper declined to a four-week low.
Copper producer Quadra FNX Mining Ltd. decreased 4.4% to $13.29 after plunging 11% yesterday.
Potash Corp., the world’s largest fertilizer producer by market value, slipped 1.1% to $162.45. Agrium lost 1.4% to $86.49.
Kinross Gold Corp., Canada’s third-largest producer of the metal, decreased 1.7% to a five-month low of $16.25. Semafo Inc., which mines gold in Africa, fell 1.7% to $10.49. Barrick Gold Corp., the world’s largest producer, dropped 0.3% to $45.93 for a fifth-straight loss, the longest streak in 10 months.
SNC-Lavalin Group Inc., Canada’s largest construction and engineering company, declined 3.3%, the most since June, to $60.05. Thirty-two percent of the company’s revenue in 2009 came from Africa, the Middle East, Latin America or Asia.
Morguard Corp., which owns commercial and residential properties in Canada and the southern U.S. soared 12.1% to $57.06 after jumping as much as 15% earlier, the most since May 2009.
On the economic beat, Canada's annual inflation rate rose less than expected in December, underscoring the view the central bank will hold interest rates steady in the near term.
Canada's annual headline inflation rate rose 2.4% after 2% in the previous month, largely due to a rise in gasoline prices. The increase was slightly below the market forecast of 2.5%, while December's consumer price index was unchanged on the month.
ON BAYSTREET
The TSX Venture Exchange tumbled 45.88 points to 2,202.72, while the Nasdaq Canada index chucked 10.35 points to 755.25.
In Toronto, only a 0.2% increase by real-estate stocks prevailed amid the general negative air.
All others among the 14 subgroups went lower, saddled by energy stocks, down 1.4%, global base metals, settling 1.2%, and health-care, 0.9% sicker.
ON WALLSTREET
In New York, equities slumped Tuesday, as investors digested a mixed batch of earnings results and a weaker-than-expected report on home prices overshadowed an improved reading on consumer confidence.
The Dow Jones Industrials were negative, though to within 3.33 points of breakeven to 11,977.20
The S&P 500 was 0.34 points better to 1,291.18. The Nasdaq Composite Index was 1.70 points higher to 2,703.87.
The retreat came after 3M and Johnson & Johnson released quarterly reports that disappointed investors. Shares of American Express fell after the company reported results late Monday that narrowly missed expectations.
But upbeat results from Travelers helped curb some of the selling. The insurance giant reported a 30% drop in quarterly net income, but issued an optimistic outlook for the rest of the year.
Verizon was another bright spot. Shares rose nearly 2% after the telecom announced a $30 U.S. unlimited data plan for the iPhone. The company amended the statement later in the day, saying the package would be available "for a limited time."
Investors were also responding to a sharp drop in home prices, and a stronger-than-expected report on consumer confidence.
Meanwhile, prices for oil and gold futures fell sharply. The weakness in commodities pressured shares of industrial stocks Alcoa and Caterpillar
However, prices for cotton futures bucked the trend, climbing to a record high amid speculation of tightening supplies and increasing demand from developing economies.
After the bell on Monday, American Express reported earnings of 94 cents U.S. per share on revenue of $7.32 billion U.S. The numbers fell a hair short of analyst estimates. Shares were down nearly 3%.
Yahoo is slated to report the market closes Tuesday, and is expected to report earnings per share of 22 cents U.S. on $1.19 billion U.S. in revenue.
President Obama is scheduled to deliver his State of the Union address Tuesday night, during which he is expected to talk about the health of the U.S. economy -- especially the labour market.
On the economic front, the Case-Shiller index of home prices in 20 major U.S. markets was released before the opening bell. Signaling that the slump in home prices has deepened, the index fell 1% in November compared with October.
The Conference Board said its index of consumer confidence rose to 60.6 in January, up from 53.3 in December. It was the highest level since May 2010 and came in stronger than expected. The index was forecast to increase to 53.5.
Prices on the benchmark 10-year U.S. Treasury moved higher, lowering the yield to 3.32% from Monday’s 3.41%. Treasury prices and yields move in opposite directions.
Oil for February delivery lost $1.58 to $86.29 U.S. a barrel.
Gold futures for February delivery tumbled $13.30 to $1,331.20 U.S. an ounce.
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