Canadian Stocks Are Falling As Oil Prices Drop -- Canadian Commentary

(RTTNews) - The Canadian stock market is struggling to find direction Tuesday morning. Energy stocks are weighing on the market, after the price of oil has fallen back below $47 per barrel. However, gold and mining stocks have helped to offset some of that weakness, as the price of gold is increasing.

The U.S. markets have returned to action today, following yesterday's Martin Luther King Jr. holiday. U.S. markets have also turned negative, after what had been a positive start.

Homebuilder confidence in the U.S. has seen a modest deterioration in the month of January, according to a report released by the National Association of Home Builders on Tuesday. The report said the NAHB/Wells Fargo Housing Market Index edged down to 57 in January from an upwardly revised 58 in December.

Economists had expected the housing market index to inch up to 58 from the 57 originally reported for the previous month.

The International Monetary Fund downgraded its global growth outlook as positive effects of lower oil prices and the depreciation of the euro and yen are more than offset by weakness in investment in many advanced and emerging market economies.

In its World Economic Outlook Update released Tuesday, the Washington-based lender said the global economy is set to grow 3.5 percent this year, down from the 3.8 percent expansion projected in October. The growth in 2016 is projected to be 3.7 percent instead of 4 percent.

Even with sharply lower oil prices, the economic outlook is still subdued weighed down by underlying weakness elsewhere, the IMF said.

Statistics Canada reported Tuesday morning that Canadian manufacturing sales dropped by 1.4 percent in November, following the 1.1 percent decrease in October. Economists had expected a decrease of 0.7 percent. The larger than expected drop in November was due to lower sales of motor vehicles, which sank 5.9 percent.

The benchmark S&P/TSX Composite Index is down 18.95 points or 0.13 percent at 14,293.55 . The market is pulling back from an early high of $14,377.63.

On Monday, the index closed up 3.09 points or 0.02 percent, at 14,312.50. The index scaled an intraday high of 14,323.82 and a low of 14,195.39.

The Energy Index is sinking by 2.24 percent, as the price of oil declines. Suncor Energy (SU.TO) is down 1.94 percent and Canadian Natural Resources (CNQ.TO) is lower by 1.19 percent. Encana (ECA.TO) is falling by 1.27 percent and Pacific Rubiales Energy is sinking by 8.77 percent.

Cenovus Energy (CVE.TO) is declining by 1.39 percent and Canadian Oil Sands (COS.TO) is down 3.77 percent. MEG Energy (MEG.TO) is plunging by 7.03 percent and Tourmaline Oil (TOU.TO) is down 3.37 percent.

The Gold Index is rising by 3.82 percent, as the price of the yellow metal increases. Kinross Gold (K.TO) is up 1.62 percent and Goldcorp (G.TO) is climbing by 2.69 percent. B2Gold (BTO.TO) is gaining 5.84 percent and Yamana Gold (YRI.TO) is adding by 3.57 percent and Royal Gold (RGL.TO) is up 1.88 percent and Eldorado Gold (ELD.TO) is higher by 4.64 percent.

The Capped Materials Index is also rising by 2.37 percent, mostly on the increase in gold. Franco-Nevada (FNV.TO) is advancing by 3.02 percent and Agnico Eagle Mines (AEM.TO) is higher by 3.08 percent. Barrick Gold (ABX.TO) is rising by 5.07 percent and Silver Wheaton (SLW.TO) is up 2.16 percent. Potash Corp. of Saskatchewan (POT.TO) is also gaining 2.42 percent.

The Diversified Metal and Mining Index is climbing by 2.02 percent. HudBay Minerals (HBM.TO) is advancing by 2.74 percent and Turquoise Hill Resources (TRQ.TO) rising by 3.63 percent. First Quantum Minerals (FM.TO) is gaining 4.03 percent and Teck Resources (TCK.TO) is up 1.18 percent. Lundin Mining (LUN.TO) is also increasing by 0.91 percent.

The Financial Index is modestly lower, falling by 0.29 percent. Canadian Imperial Bank of Commerce (CM.TO) is declining by 0.31 percent and Royal Bank of Canada (RY.TO) is down 0.46 percent. Toronto-Dominion Bank (TD.TO) is also lower by 0.47 percent.

The Health Care Index is down 0.11 percent. Extendicare (EXE.TO) is falling by 0.75 percent and Catamaran (CCT.TO) is down 0.29 percent.

The Information Technology Index is losing 0.54 percent. Sierra Wireless (SW.TO) is declining by 2.59 percent.

The Chinese economy grew at the weakest pace since early 2009 in the fourth quarter, though the growth was more than the consensus estimate, data from the National Bureau of Statistics reported Tuesday. Gross domestic product, or GDP, grew 7.3 percent in the fourth quarter from a year ago, the same rate as in the third quarter.

This was the weakest growth since the first quarter of 2009. However, the growth was stronger than the 7.2 percent rise forecast by economists.

Falling oil prices and weak euro boosted German economic confidence to an 11-month high in January, survey results from the ZEW Centre for European Economic Research showed Tuesday. The indicator of economic sentiment rose sharply to 48.4 in January from 34.9 in December, the Mannheim-based institute said. The reading was forecast to rise to 40.

Germany's producer prices declined at the fastest pace since March 2010, data from Destatis showed Tuesday. Producer prices fell 1.7 percent year-on-year in December, the biggest fall since March 2010 when it declined 1.8 percent. Prices decreased for 17 consecutive months.

Economists had forecast producer prices to drop 1.4 percent after easing 0.9 percent in November.

In commodities, crude oil futures for February delivery are down $2.18 or 4.88 percent at $46.51 a barrel.

Natural gas for February is down $0.2.37 or 7.58 percent at $2.89 per million btu.

Gold futures for February are up $14.60 or 1.14 percent at $1,291.50 an ounce.

Silver for March is up $0.12 or 0.68 percent at $17.87 an ounce.