Energy stocks send TSX lower, oil falls for fifth day

Energy stocks send TSX lower, oil falls for fifth day; N.Y. also declines
11:12 July 7, 2009, EDT.
(Canadian Press)


TORONTO - The Toronto stock market found it tough to find footing at mid-morning on Tuesday as crude prices continued to lose ground amid demand concerns.

The S&P/TSX composite index dropped 49.1 points to 9,978.3 on top of steep losses on Monday.

The main index fell 256 points or 2.5 per cent as investors continued to react to last Thursday's much worse than expected U.S. employment report for June, which cast further doubt on an economic recovery being in place by the end of the year.

On Tuesday morning, the energy sector lost early headway to move another 0.7 per cent lower as the August crude contract on the New York Mercantile Exchange fell $1.14 to US$62.91 a barrel. Crude prices are down for a fifth day and are down almost nine per cent since the beginning of the month.

The drop in the price of crude has sent stocks falling as investors anticipate that a weaker world economy will mean less demand for energy.

Suncor Inc. (TSX:SU) declined 32 cents to $30.53.

The Canadian dollar moved down 0.03 of a cent to 86.24 cents US amid positive news from the housing sector.

Statistics Canada reported construction intentions were up 14.8 per cent from April, due to gains in both residential components and two of the three non-residential components. The value of permits surpassed the $5-billion mark in May for the first time since last October.

The TSX Venture Exchange was ahead 9.15 points to 1,073.78.

New York markets were weak.

The Dow Jones industrial average lost 63.4 points to 8,261.5. The Nasdaq composite index was down 14.19 points to 1,773.21 while the S&P 500 dipped 6.85 points to 891.85.

Investors have become more tentative in recent weeks after the market's spring rally, which sent indexes as high as about 40 per cent. Some fear they might have been too optimistic in March and April about how soon the economy might recover from the recession.

"Our view is that the economy is still in a precarious state," said Ben Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J.

"The weak consumer, driven by very high unemployment, destroyed wealth and unavailable credit is going to continue to be a major drag on the U.S. economy."

Investors are also looking to Wednesday's kickoff of the U.S. second-quarter earnings season. Aluminum maker Alcoa Inc. is expected to post a second-quarter loss of 37 cents per share. In the same period a year earlier, Alcoa earned 66 cents per share on revenue of US$7.6 billion.

Elsewhere on the Toronto market, the industrials sector was down one per cent as Canadian Pacific Railroad (TSX:CP) fell $1.51 to $41.57.

The base metals sector was flat as the price of copper edged two cents lower to US$2.23 a pound.

The August bullion contract on the Nymex inched 20 cents higher to US$924.50 an ounce.

The financial sector was off 0.55 per cent. Sun Life Financial Inc. (TSX:SLF) gave back 42 cents to $29.24.

Manulife Financial Corp. (TSX:MFC) shares rose 22 cents to $19.29 after the insurance giant said Monday it would issue $1 billion in notes to boost its Tier 1 capital.

Shares in drugstore chain The Jean Coutu Group (TSX:PJC.A) were ahead 30 cents to $9.68 after the company said that quarterly net earnings came in at $10.3 million, or four cents per share, reversing year-earlier losses of $20.2 million or eight cents per share.

The profits came despite a loss of $30.9 million or 13 cents per share from its stake in Rite Aid, a U.S. drugstore business in which the company owns a stake.

In other corporate news, timber giant Weyerhaeuser, which has been losing money because of the moribund U.S. housing market, is cutting its quarterly dividend to five cents US from 25 cents.

The Federal Way, Wash., company, which lost more than US$1 billion in the last quarter, cut its dividend to 25 cents from 60 cents in December 2008.

Struggling U.S. automotive parts supplier Lear Corp. (NYSE:LEA) has filed for Chapter 11 bankruptcy protection after receiving the support it needed from lenders and bondholders.

Lear, based in Southfield, Mich., said its subsidiaries outside the U.S. and Canada are not part of the filings. The company has locations in five Ontario cities - Ajax, Kitchener, St. Thomas, Whitby and Windsor.

Thomson Reuters Corp. (TSX:TRI) has bought Streamlogics, a privately held webcasting firm. Terms of the deal for Toronto-based Streamlogics were not undisclosed. Thomson Reuters shares were off 31 cents to $33.11.



Shares in cable companies were mixed after the CRTC opened the door for a system of payments from those operators to broadcasters, known as carriage fees. The CRTC wants broadcasters and cable companies to negotiate what the payment should be. If that doesn't work, the two sides would go to arbitration. Shaw Communications (TSX:SJR.B) declined 34 cents to $18.51 while Rogers Communications (TSX:RCI.B) added four cents to $29.46.

Overseas, Japan's Nikkei 225 stock average was down 18.11 points, or 0.2 per cent, at 9,662.76.

Hong Kong's Hang Seng gained 117.67, or 0.7 per cent, to 18,097.09 as a Chinese central bank researcher said China's economy is improving and growth might top 7.5 per cent for the quarter that ended in June.

London's FTSE 100 index was up 0.38 per cent, Frankfurt's DAX was off 0.7 per cent while the Paris CAC 40 slid 0.6 per cent.