MW: Canada equities set for first fall in six sessions
U.S. ADP data disappoints; resource stocks in Toronto weaken
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Canadian equities headed lower Wednesday, pulling back after tallying a five-session gain of nearly 3% as disappointing data on U.S. private payrolls renewed concerns over the recovery in the global economy.
The S&P/TSX Composite Index CA:$ISPTX -0.81% fell 102 points, or 0.8%, to trade at 12,230.74. The benchmark index had tallied a gain of 2.9% over the past five sessions.
Data from Automatic Data Processing Inc. Wednesday showing that the U.S. private-employment gain in April of 119,000 was at its weakest since September also weighed on U.S. and some European stock markets. Read more on U.S. ADP.
“Adding to the growing concern that the global economy may be falling back into recession, today’s ADP payrolls out of the U.S. also disappointed,” said Colin Cieszynski, market analyst at CMC Markets Canada, in a note.
“This suggested that the surprisingly weak March U.S. nonfarm payrolls weren’t a one-off stutter and that the U.S. recovery may be losing momentum,” he said. “This comes as a particular disappointment as the U.S. has been one of the few bright spots of late and traders had been counting on the U.S. to make up for weakness in Europe and other areas.”
Also weighing on the Canadian market were data showing that Canadian small business confidence fell in April for the first time since last August. The Business Barometer Index, compiled by the Canadian Federation of Independent Business declined 1.3 points to 66.4. Read more about small business confidence.
Drag on resource stocks
Resource stocks declined in Toronto, as metals and energy futures prices headed lower in New York. Read more about the fall in metals prices.
The S&P/TSX Capped Diversified Metals & Mining Index XX:TTMN -2.43% was down 2.4%, The S&P/TSX Capped Gold Index XX:TTGD -1.36% lost 1.5% and the S&P/TSX Capped Energy Index XX:TTEN -1.49% fell 1.6%.
Shares of Canada Natural Resources Ltd. CA:CNQ -2.02% declined by 2.3% and Encana Corp. CA:ECA -1.32% fell 1.9%. Yamana Gold Inc. CA:YRI -1.79% traded 2% lower, though it posted a slightly better-than-expected first quarter profit late Tuesday.
Stock in Barrick Gold Corp. CA:ABX -2.21% fell 2.3%. The company on Wednesday raised its quarterly dividend by 33% to 20 U.S. cents per share, but first-quarter adjusted earnings missed some analyst estimates.
In currencies action, the Canadian dollar weakened against the U.S. dollar, with the greenback USDCAD -0.0138% buying 98.83 Canadian cents, up from 98.56 Canadian cents late Tuesday.
“Although the Bank of Canada sounded a little more hawkish than the consensus expected last week, the weaker than expected [Canadian] GDP figures announced on Monday has led to a renewed rally in the USD against the Canadian dollar,” said Ken Dickson, investment director of currencies at Standard Life Investments.
“We believe that the loonie remains vulnerable to continued economic data disappointments as Canada is more exposed to the global slowdown than is the U.S.,” he said. And “as the Canadian dollar is approximately 20% overvalued, we think it will continue to underperform in the majority of expected scenarios over the next few months.”
Myra Saefong is a MarketWatch reporter based in San Francisco.
