TORONTO - The Toronto stock market declined Monday, pulled down partly by the telecom sector as Ottawa announced it will be setting aside the majority of spectrum in a new wireless auction for newer, smaller entrants in Canada's cellphone industry.
The S&P/TSX composite index lost 42.03 points to 15,172.93 as lower commodities prices also contributed to the decline.
Industry Minister James Moore said most of the AWS-3 spectrum being auctioned next year will only be available to telecom companies that emerged after 2008, such as Wind Mobile and Mobilicity. The government said the move is part of its efforts to lower the prices of wireless plans and will be in addition to the auction of 2,500 megahertz spectrum that's already scheduled for April 2015.
Shares in the big three telecom giants all reacted negatively. BCE Inc. (TSX:BCE) dropped 31 cents to $48.21, Rogers Communications (TSX:RCI.B) fell 66 cents to $42.36 while Telus Corp. (TSX:T) dipped 65 cents to $39.28. The telecom sector was the leading decliner on the TSX, down by nearly one per cent at the close.
The Canadian dollar was lower after gaining strength last week, losing 0.18 of a cent to 93.66 cents US.
The Bank of Canada, in its summer survey, says Canadian business leaders remain confident about the economy, although less so compared with its spring poll. And most still remain cautious when it comes to plans for investment and hiring.
Wall Street was also lower after the Independence Day long weekend. The Dow Jones industrials lost 44.05 points to 17,024.21, the Nasdaq dropped 34.40 points to 4,451.53 and the S&P 500 dipped 7.79 points to 1,977.65.
Traders will look for hints this week for clues to the pace of future interest rate hikes as the Fed releases the minutes of its latest meeting on Wednesday. Speculation ahead of the release helped weaken commodity prices.
Oil fell below US$104 a barrel as expectations of increased supply offset strong U.S. job growth. Oil has been sliding since it reached a 10-month closing high of US$107.26 on June 20 due to concern over advances by Islamic militants in Iraq.
Since then, it has become clear there is no imminent danger to oil supplies from Iraq, the second-biggest producer in the Organization of the Petroleum Exporting Countries. The August crude contract was down 53 cents to US$103.53 a barrel.
August gold bullion fell $3.60 to US$1,317 an ounce while September copper slipped two cents to US$3.26 a pound.
In corporate news, shares in BlackBerry shot up more than five per cent, or 64 cents, to $12.01 on the Toronto Stock Exchange â€” a possible sign that investors are starting to believe that chief executive John Chen can turn around the tech company.
Markets will also be watching the results from resource company Alcoa Inc., which will be kicking off the second-quarter U.S. earnings season Tuesday. Alcoa is viewed as an economic bellwether because its aluminum products are used in so many applications.
"The markets might tread water for a bit," said Ian Nakamoto, director of research at 3MACS. "Everyone keeps talking about some sort of pullback but it doesn't seem to happen. Coming into earnings season, there might be a more meaningful sell-off but the bar is still set very low for earnings expectations."
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