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Weak Asian data, geopolitical concerns, earnings news weigh on TSX

TORONTO - The Toronto stock market closed with a small loss Wednesday amid weak earnings reports and soft economic data.

The S&P/TSX composite index edged 11.5 points lower to 15,262.73.

The Canadian dollar was up 0.04 of a cent to 91.6 cents US, a day after Statistics Canada announced there was a data error in the July employment report released last Friday. A revised report will be issued this Friday.

New York indexes gained ground even as seasonally adjusted retail sales in the U.S. were unchanged in July compared with the prior month.

The Dow Jones industrials climbed 91.26 points to 16,651.8, the Nasdaq rose 44.88 points to 4,434.13 and the S&P 500 index was 12.97 points higher at 1,946.72.

China's industrial production rose nine per cent in July from a year earlier, edging down from a 9.2 per cent increase in June. Retail sales and fixed asset investment also declined.

Geopolitical worries been in focus recently and on Wednesday traders looked to what might happen when a convoy of more than 260 Russian trucks, reportedly packed with supplies, arrives at the Ukraine border. Kyiv said the goods would be allowed to cross only if they are inspected by the International Red Cross. Ukraine is fearful that Russia could use the move as a cover for sending troops into separatist-held territory.

But the strong gains in New York reflected optimism that a peaceful solution will be found.

"We’re seeing overall that the geopolitical tensions have not been priced into the market yet," observed Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.

"The risk here is that the market isn’t leaving much of a buffer for any sort of bad news or that surprise factor."

Turmoil in Iraq has also captured market attention. Iraqi Prime Minister Nouri al-Maliki says the president’s tasking of another politician with forming a new government amounts to a “constitutional violation” and would have worse consequences than the takeover of much of the country’s north by militants.

The poor China data raised hopes that the Chinese government will step up with a rate cut or other stimulus to keep gross domestic product growth from slowing. But the base metals component led decliners, down 0.6 per cent as the data pushed September copper down four cents to US$3.11 a pound.

The consumer staples sector was down 0.37 per cent as Quebec-based grocery chain Metro Inc. (TSX:MRU) reported third-quarter net earnings of $144.5 million, or $1.63 per diluted share, a penny below forecasts. Sales were $3.62 billion, up 1.4 per cent year-over-year and Metro shares declined $1.79 to $69.51.

The industrials sector was also weak, down 0.58 per cent with CAE (TSX:CAE) shares down 24 cents at $13.60 after the flight simulator maker reported quarterly earnings of $41.6 million or 16 cents a share, compared with a net profit of $45.6 million, or 18 cents per share, a year ago. Revenues were up at $526.2 million compared with $520.1 million year-over-year. CAE also upped its quarterly dividend by a penny to seven cents a share.

The energy sector slipped 0.26 per cent as September crude in New York gained 22 cents to US$97.59 a barrel, erasing earlier losses racked up as data showed U.S. inventories unexpectedly rose last week.

The gold sector was flat as December bullion improved by $3.90 to US$1,314.50 an ounce.

The Canadian Press


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