Losses in mining sector pare gains in broader market
By Myra P. Saefong and Ashley P. Lau, MarketWatch
CHICAGO (MarketWatch) — Canadian stocks finished near flat Tuesday after shares of mining companies retreated on declining gold and silver futures, paring gains in the broader market.
The S&P/TSX Composite Index CA:$ISPTX +0.01% edged up a fraction of a percent at 13,909.1 by close, after tipping a low of 13,871.24 earlier. Strong U.S. earnings reports helped fuel a positive investor sentiment, but stocks traded on the resource-heavy Toronto Stock Exchange came under selling pressure as precious metal futures dropped.
Gold sank below $1,500 an ounce and silver declined by more than 4% in New York. Last week, gold had scored a string of records and silver touched 31-year highs. Read Tuesday’s story on metals.
The S&P/TSX Capped Diversified Metals & Mining Index CA:TTMN -0.92% finished down 0.9% and the S&P/TSX Global Gold Index CA:TTGD -1.36% lost 1.4%.
“Silver producers have been leading decliners, dragged lower by the big retrenchment in the silver price,” Colin Cieszynski, market analyst at CMC Markets, said in emailed comments.
“Gold producers have also been falling, led by Barrick Gold, as the street continues to react to yesterday’s agreement to purchase Equinox Minerals and the associated transaction and integration risks,” he said.
Shares of Equinox Minerals Ltd. CA:EQN -3.11% EQXMF -2.24% sank 3.1%, a day after Barrick Gold Corp. ABX -3.22% CA:ABX -3.54% said it will buy the copper miner in a deal valued at C$7.3 billion ($7.67 billion). Barrick shares finished down 3.5%. Read more about Barrick’s Equinox bid.
Among other metals-mining stocks, Yamana Gold Inc. CA:YRI -2.74% lost 2.7% by close and First Quantum Minerals Ltd. CA:FM -2.02% declined by 2%.
Offsetting the losses among gold producers have been gains in some oil producers, said Cieszynski. Cenovus Energy Inc.’s stock CA:CVE +1.43% finished up 1.4%.
Financials were also among the gainers Tuesday, however, with the S&P/TSX Capped Financials Index CA:TTFS +0.31% adding 0.6%. Shares of Sun Life Financial Inc. CA:SLF +2.02% SLF +2.05% moved up 2% as Manulife Financial Corp. CA:MFC +1.07% MFC +1.48% tacked on 1.1%.
In currency trading, the Canadian dollar rose against its U.S. counterpart, with the greenback USDCAD +0.0210% buying 95.17 Canadian cents, down from 95.48 cents in the previous session.
In a research note, analysts at Barclays Capital said the Canadian dollar is still one of their “favorite longs among the major currencies in the short run, and should outperform other commodity currencies over the long run.”
“As U.S. growth accelerates and the [U.S. Federal Reserve] moves toward raising rates in the middle of next year, CAD should begin to slip,” especially against currencies such as the British pound, but the Canadian currency should still outperform other commodity currencies, the Barclays analysts said.
