Mar. 15, 2010 (Baystreet.ca) --
The commodities sector led the way to a decline on the Toronto stock market Monday amid concerns over sovereign debt ratings in some of the world's most powerful countries and worries that the Chinese economy could slow.
The S&P/TSX composite index, despite a late charge Monday, still trailed Friday's close by 5.02 points, to 12,008.50.
Oil and metal prices fell after credit rating agency Moody's raised the spectre of a debt downgrade for the U.S. and Britain while fears of further monetary tightening by Chinese authorities continued to discourage investors.
Moody's said debt affordability is "most stretched" in the U.S. and Britain among countries with the top triple-A rating. A drop in the credit rating could make it more expensive for the governments to borrow money. For now though, Moody's said the triple-A governments don't face an immediate threat to their top ratings as debt servicing remains manageable.
The energy sector was down per cent as worries about lower demand sent the April crude contract on the New York Mercantile Exchange lower. On the TSX, Canadian Natural Resources declined $1.50 to $72.23 and Suncor Energy shed 81 cents to $31.03.
The base metal sector was off as the May copper contract on the Nymex moved down seven cents to $3.31 U.S. a pound. On the TSX, Teck Resources slipped 62 cents to $40.96 while Sherritt International fell a dime to $8.84.
The TSX global gold index stepped back as Goldcorp Inc. slipped 18 cents to $39.91 while Kinross Gold Corp. was down 26 cents to $17.94.
Declines spread outside commodities as transport giant Bombardier Inc. helped send the industrials sector lower, losing a nickel to $5.86.
On the earnings front, Pacific Rubiales Energy Corp. shares were off 12 cents to $18.93 after it said that its operational profits came in at $77.2 million U.S. in the year ended Dec. 31, lower than the $175.7-million profit it generated the year before.
Pacific Rubiales, which calls itself the second largest oil producer in Colombia, did not indicate any net earnings nor per share information on its release, though it said net sales increased $639.2 million versus $579.1 million.
Kirkland Lake Gold Inc. shares slipped 15 cents to $7.34 as it reported a third-quarter net loss of $8.3 million, down from $10.3 million a year ago. Revenue moved down to $6.2 million from $8.6 million on lower gold sales but its main mine is "back to normal" after a borehole collapse in 2009.
Private wealth manager Dundee Corp says it has increased its stake in Dundee Precious Metals to more than 24%. Dundee said Monday that it had acquired almost 8.9 million more common shares of DPM at $3.30 a common share. Dundee Corp. shares lost 42 cents to $12.83 while Dundee Precious Metals dropped six cents to $3.20.
And Redline Communications Inc. shares tumbled 13 cents or 29.5% to 43.5 cents after it said it expects to miss the deadline for its quarterly and full-year financial statements after an internal review showed it may have not used proper revenue recognition accounting policies.
In economic news, Statistics Canada said new motor vehicle sales were unchanged at 128,426 units in January. Sales of new trucks were up by 2.4% to 65,726 units, but sales of North-American built passenger cars dipped by 8.2% to 34,234 units.
In other news, Canadian home re-sales fell 1.5% to 42,799 units in February from the previous month, according to data released by the Canadian Real Estate Association. Meanwhile, the average resale prices of homes were up 18.2% to $335,655 in February from a year-ago period.
The Canadian dollar was down 0.10 cents to 98.11 cents U.S.
ON BAYSTREET
All but three of the 14 TSX subgroups toppled Monday. Energy, as mentioned, was the worst off of the losers, sliding 1.4%, followed by materials and global base metals, falling 0.6% each.
The three gainers were financials, ahead 0.9%, utilities, up 0.6% and telecoms, moving up 0.4%.
The TSX Venture Exchange removed 6.78 points to 1,561.51, while the Nasdaq Canada index eked ahead 1.17 points to 808.63.
ON WALLSTREET
In New York, stocks dipped Monday as investors weighed Moody's warning about the United States' AAA rating, a proposed bank regulation bill and Google's potential exit from the lucrative Chinese market.
The 30 stocks within the Dow Jones industrials put on a spurt near the closing and enabled the average to gain 17.46 points to 10,642.15. The S&P 500 index managed a gain of 0.52 points to 1,150.51, and the Nasdaq composite moved backward 5.45 points to 2,346.18.
Stocks had tumbled through the early afternoon, but managed to trim some losses late in the session.
Comments by Moody's that the United States and Britain are more likely to see a downgrade than rivals Germany and France soured investor sentiment.
However, the ratings agency was quick to note that there is no imminent rating pressure for the U.S. or the other countries, even amid extensive spending in the aftermath of the global recession.
Moody's raising the warning on U.S. debt was unsurprising and not a cause for alarm, said Matt King, chief investment officer at Bell Investment Advisors."The risk of the U.S. defaulting on its debt is nil and there's no cause for immediate concern," he said. "Longer term, it means that we'll see rising rates."
King also said that stocks are in a quiet period right now in terms of news flow, making continued market choppiness likely, until the next unemployment report is released and the first-quarter reporting period gets underway.
Stocks may see volatility this week in the aftermath of an advance that propelled the Dow, S&P 500 and Nasdaq higher in four of the last five weeks. The rally left the Nasdaq and S&P 500 at the highest point since September 2008 and the Dow just below those levels.
Since bottoming at a 12-year low on March 9 of last year, the Dow has gained 62% and the S&P 500 has gained 70%. Since bottoming at a 6-year low on the same day, the Nasdaq has gained 87%.
Google is reportedly close to shutting down its Chinese search engine, amid strict government monitoring and a recent targeted cyber attack. Shares fell 4% and the weakness dragged on other tech stocks.
Philips-Van Heusen, the owner of Calvin Klein, will buy fashion brand Tommy Hilfiger from Apax Partners in a cash-and-stock deal worth $3 billion U.S. Shares of Philips-Van Heusen rose 9% in Monday trading.
Chordiant Software shares rallied 30% in unusually active trading after the maker of customer service management software agreed to be bought by Pegasystems for $161.5 million U.S. in cash.
Boston Scientific said it is halting sales of its heart-shocking defibrillator implants after it neglected to tell regulators about two production changes in the manufacturing of the product.
Shares fell 13% in active New York Stock Exchange trading.
Wal-Mart Stores rose 2.7% after Citigroup upgraded it to "buy" from "hold" and raised its price target to $65 U.S. from $54 U.S., saying the company is getting more competitive in the "modern-day price war in food retail in 2010."
Troubled financial firm AIG said it will withhold $21 million U.S. in bonuses that are due to former and current staff of its Financial Products unit, the unit most directly responsible for its almost-collapse 18 months ago. AIG will pay out $46 million U.S. to other employees of that unit.
Roughly 18 months after the collapse of Lehman Brothers, Senate Banking Chief Christopher Dodd released a draft bill of broad regulatory changes aimed at preventing another financial crisis.
The bill calls for a new consumer protection bureau within the Federal Reserve that would regulate all lending transactions. It would also set up a new process to put struggling firms under government control and break up large companies if they pose a major threat to the stability of the system.
The bill does not go as far as what President Obama has proposed, nor does it go as far as similar legislation already passed in the House. Getting it passed will be an uphill battle in the Senate.
Economically speaking, industrial production and capacity utilization, which measure factory output, both rose more than expected last month, according to a Federal Reserve report released Monday.
Industrial production rose 0.1% in February, after rising 0.9% in January. Economists surveyed by Briefing.com thought industrial production would be unchanged, according to a consensus of economists surveyed by Briefing.com.
Capacity utilization rose to 72.7% from 72.5% in January, versus forecasts for an unchanged reading.
The Empire manufacturing survey, a regional reading on manufacturing, fell to 22.86 in March from 24.91 in February, a little stronger than the 22 level expected by economists.
On Tuesday, the focus turns to the Federal Reserve, meeting to discuss interest rates. The central bank is widely expected to hold the fed funds rate, a key overnight banking rate, steady at historic lows near zero. However, what the bankers say in the statement about the economic outlook and the future of Fed policy will be critical.
Treasury prices were unchanged, with the yield on the 10-year note at 3.71% unchanged from late Friday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil nosed ahead eight cents to $79.88 U.S.
Gold prices picked up four dollars to $1,106 U.S.
