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Latest Headlines
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Jun 12, 2009 7:54:00 AM MST
Lower oil takes TSX lower; N.Y. down, investors look to data, bond yields (Dollar-Markets)
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TORONTO _ The Toronto stock market was negative in early trading Friday morning as falling oil prices pushed energy stocks lower.
The S&P/TSX composite index declined 79.3 points to 10,634.8 after oil and mining stocks helped push the main index 116 points higher on Thursday.
The energy sector moved down 1.5 per cent as the July crude contract on the New York Mercantile Exchange slipped $1.05 to US$71.63 a barrel.
The dip came as the Organization of the Petroleum Exporting Countries forecast Friday that demand for its crude this year would average 28.6 million barrels a day _ 2.2 million barrels less than in 2008.
EnCana Corp. (TSX:ECA) fell 87 cents to $62.12.
The TSX is headed for a third straight weekly gain as a powerful spring rally into its fourth week continues to chug along on hopes for an economic recovery by the end of the year.
However, investor sentiment has been weighed down this week by rising U.S. Treasury yields that have raised worries about higher interest rates and inflation.
The TSX Venture Exchange was down 8.54 points to 1,139.78 while the Canadian dollar lost 1.48 cents to 89.17 cents US.
New York markets were lower at the end of tepid week.
The Dow Jones industrial average moved 34.8 points lower to 8,736.2 after rising 32 points in the wake of positive reports on retail sales and jobless benefit claims.
The Nasdaq composite index declined 16.5 points to 1,845.8 while the S&P 500 index was off 5.4 points to 939.5.
A new reading on U.S. consumer sentiment is expected Friday morning, with any improvements a signpost of economic recovery as consumer spending accounts for more than two-thirds of economic activity.
Gains on stock markets have been spotty this week as investors wonder if a pause is in order after the TSX ran up 40 per cent since the March 9 lows.
The S&P has gained 39.7 per cent and the Dow has jumped 34 per cent since the market bottomed in early March.
Joe Clark, managing partner of Financial Enhancement Group in New York, compared the market to a sponge _ during the recent run-up in prices, investors absorbed all the good news they could take in to push stocks higher. Eventually the market becomes saturated and can´t absorb any more information, he said.
"The sponge seems to be full," Clark said.
Rising bond yields have been a worry this week as investors became concerned that rising interest rates and weakening demand for U.S. government debt could derail a potential recovery in the economy. If Washington has to raise rates to attract buyers, that could hurt the economy by boosting borrowing costs for consumers.
But Thursday´s bond auction results helped eased some of those concerns as demand for the debt appeared strong and bond yields declined with the yield on the benchmark 10-year Treasury note, which moves opposite its price, falling to 3.83 per cent from 3.86 per cent late Thursday.
The Toronto market also came under pressure from declines in the high-flying base metals sector, which had rocketed up 150 per cent since early March. It was off over two per cent Friday with Teck Resources (TSX:TCK.B) down 43 cents to $20.26.
The gold sector faded 1.35 per cent as the August bullion contract moved down $23.20 to US$938.80 an ounce. Goldcorp Inc. (TSX:G) ped 92 cents to C$39.06.
In corporate news, British bank Barclays reported that it has sold its Global Investment unit to U.S. fund manager BlackRock Inc. for US$13.5 billion.
Drug maker Patheon Inc. (TSX:PTI) reported Friday a profit of US$500,000 profit, reversing a year-ago loss of $8-million as its restructuring and cost-cutting program continued. Its shares dipped a penny to $2.79.
Overseas, Japan´s Nikkei stock average rose 1.6 per cent, while Hong Kong´s Hang Seng gained 0.5 per cent. Asian markets were buoyed by reports that retail sales and industrial output grew strongly in China in May.
Britain´s FTSE 100 fell 0.7 per cent, Germany´s DAX index declined 1.1 per cent, and France´s CAC-40 fell 0.45 per cent.
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