Energy stocks help send TSX down 140 points; C$ retreats on manufacturing data | | |
| 11/15/2007 8:56:00 AM | | |
TORONTO - The Toronto stock market was firmly in the red Thursday morning as investors focused on writeoffs of mortgage-backed securities by financial institutions here and abroad, and energy stocks worsened on data showing rising supplies in the U.S. New York markets were ahead slightly as investors took in inflation data and negative news from the retail sector. Toronto's S&P/TSX composite index retreated 140.16 points to 13,634.38. The TSX Venture Exchange was off 25.02 points to 2,963.74. The Canadian dollar continued to fall in the wake of a warning from a senior official of the Bank of Canada about the economic downside of a sharply higher currency. The loonie dropped 1.19 cents to 102.29 cents US after falling almost eight-tenths of a cent Wednesday. The currency has been on a downward track since hitting a record high a week ago of just over 110 cents US, at the same time oil prices were creeping closer to US$100 a barrel. But it got an extra push Wednesday after Bank of Canada official Paul Jenkins said the dramatic rise in the loonie this year is putting Canada's economic growth in peril. His warning was backed up Thursday by a grim report from the manufacturing sector. Statistics Canada said manufacturing sales declined 0.9 per cent in September to $50.4 billion, continuing a six-month weakening trend. Third-quarter sales were 1.8 per cent lower than those in the second quarter of 2007. The dismal performance happened the same month the Canadian dollar achieved parity with the greenback for the first time since 1976. "The culprit for the falling prices and generally weak real activity is the soaring loonie, suggesting that most factory metrics will remain weak in the months ahead," said BMO Nesbitt Burns senior economist Michael Gregory. "This sector's cries for Bank of Canada rate cuts are going to reach a deafening volume." On Wall Street, the Dow Jones industrials gained 20.4 points to 13,251.41. The Nasdaq composite index rose 2.84 points to 2,647.16 and the S&P 500 index faltered 0.55 of a point to 1,470.03. Shares at Loblaw Cos. (TSX:L) were down $2.61 to $37.98 after third-quarter profit fell to $117 million from $203 million a year-earlier on special charges. However, sales were up 1.4 per cent. Western Canadian Coal Corp. (TSX:WTN) shares plunged 42.26 per cent to 97 cents as its second-quarter loss hit $43.9 million after writedowns and the firm said it needs financing. An analyst report from Scotia Capital says the Bank of Montreal (TSX:BMO) and National Bank (TSX:NA) - the last two major Canadian banks to unveil expected writedowns for the quarter - could disclose a combined charge that totals up to $1 billion. In the past week, CIBC (TSX:CM), Royal Bank (TSX:RY) and Scotiabank (TSX:BNS) have announced writedowns from losses in the U.S. subprime mortgage market - but those losses have been largely offset by gains from the initial public offering of Visa Inc. The TSX financial sector dropped 0.8 per cent as Bank of Montreal added 24 cents to $57.77, National Bank declined 43 cents to $51.80 and Royal Bank eased 43 cents to $51.96. Barclays Capital, a unit of Barclays Group PLC, wrote down US$2.7 billion amid the turmoil in credit markets, but said profit is running ahead of last year's strong performance. The bank had been facing increasing calls to disclose the extent of its exposure to crisis-hit U.S. subprime mortgages and liabilities in the subsequent credit squeeze. The update did not give any information on the wider group's performance, but Barclays said it would provide a full third-quarter update as originally scheduled. The energy sector dipped 1.13 per cent as oil prices lost ground after inventory data from the U.S. Department of Energy showed oil inventories rose by 2.8 million barrels last week, against an expected decline of 300,000 barrels. The December crude contract on the New York Mercantile Exchange fell $1.98 to US$92.11 a barrel. Canadian Natural Resources (TSX:CNQ) dropped $1.25 to C$70.79 and EnCana Corp. (TSX:ECA) declined 68 cents to $66.31. First Calgary Petroleums Ltd. (TSX:FCP) is issuing US$267 million worth of convertible debt "to implement the company's independent development strategy in respect of its Algerian assets." Its shares tumbled 26 cents to $3.28. The gold sector retreated 2.37 per cent as the December bullion contract in New York headed $20.60 lower to US$794.10 an ounce. Barrick Gold (TSX:ABX) was off $1.21 to $39.94. The base metals sector was also weak, down 2.2 per cent as Teck Cominco Ltd. (TSX:TCK.B) moved off 87 cents to $42.27. Ivanhoe Mines (TSX:IVN) was off 32 cents to $12.71 after reporting a third-quarter loss of US$83.1 million or 22 cents per share, compared with a loss of US$66.5 million or 20 cents per share for the same period last year U.S. inflation data came in as expected. The Labour Department's consumer price index rose by 0.3 per cent in October, the same as September's increase and analysts' forecast. The core rate came in at 0.2 per cent, which also met analyst expectations. In earnings news, U.S. retailer J.C. Penney Co. reported a nine per cent drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook, indicating that housing woes are taking a toll on shoppers as well. Its stock retraced 3.77 per cent to US$44.97. Major stock indexes in Europe slumped. Britain's FTSE 100 declined 58.9 points to 6,373.2, Germany's DAX index fell 113.18 points to 7,669.93 and France's CAC-40 shed 42.79 points to 5,570.81. In Asia, Japan's Nikkei stock average closed down 0.67 per cent and Hong Kong's Hang Seng index fell 1.42 per cent. |