Canadian Stocks Are Falling On Commodity Weakness -- Canadian Commentary

(RTTNews) - The Canadian stock market is down in early trade Thursday, following the sharp gains of the previous two sessions. Commodity prices are falling this morning, after yesterday's interest rate hike by the U.S. Federal Reserve. Gold, mining and energy stocks are among the weakest performers.

Markets in Europe are firmly in positive territory Thursday, but are off their early highs. Yesterday's Fed announcement occurred after the European close, so today's session has been their first opportunity to react to the rate hike.

Markets in the United States are modestly lower this morning. Following yesterday's rally, profit taking may be partly responsible for today's weakness. The Fed's interest rate hike had been expected for some time and the accompanying statement put investors at ease.

After reporting first-time claims for U.S. unemployment benefits at a five-month high in the previous week, the Labor Department released a report on Thursday showing a pullback in initial jobless claims in the week ended December 12th.

The report said initial jobless claims fell to 271,000, a decrease of 11,000 from the previous week's unrevised level of 282,000. Economists had expected jobless claims to pull back to 275,000.

After reporting a slight improvement in regional manufacturing conditions in the previous month, the Federal Reserve Bank of Philadelphia released a report on Thursday showing that regional manufacturing activity unexpectedly contracted in December.

The Philly Fed said its diffusion index for current activity fell to a negative 5.9 in December from a positive 1.9 in November, with a negative reading indicating a contraction. Economists had expected the index to edge down to a positive 1.2.

With building permits, the interest rate spread, and stock prices driving the improvement, the Conference Board released a report on Thursday showing its leading U.S. economic indicators index rose by more than expected in November.

The Conference Board said its leading economic index climbed by 0.4 percent in November following a 0.6 percent increase in October. Economists had expected the index to edge up by 0.2 percent.

The benchmark S&P/TSX Composite Index is down 81.68 points or 0.62 percent at 13,084.40.

On Wednesday, the index closed up 246.51 points or 1.91 percent, at 13,166.08. The index scaled an intraday high of 13,182.66 and a low of 12,967.12.

The Gold Index is falling 4.50 percent. Gold prices are falling this morning, after the Federal Reserve announced an interest rate increase yesterday.

Goldcorp (G.TO) is decreasing 4.53 percent and Barrick Gold (ABX.TO) is declining 4.84 percent. Eldorado Gold (ELD.TO) is falling 3.19 percent and Royal Gold (RGL.TO) is losing 1.84 percent. IAMGOLD (IMG.TO) is weakening by 4.57 percent and B2Gold (BTO.TO) is down 4.55 percent. Yamana Gold (YRI.TO) is lower by 3.38 percent and Kinross Gold (K.TO) is surrendering 4.12 percent.

The Capped Telecommunication Services Index is losing 3.70 percent. BCE (BCE.TO) is weakening by 2.30 percent and TELUS (T.TO) is sinking 9.03 percent. Manitoba Telecom Services (MBT.TO) is dipping 0.24 percent.

Shaw Communications (SJR-B.TO) is declining 8.75 percent, after it has agreed to buy Mid-Bowline Group Corp and its subsidiary Wind Mobile Corp.

The Capped Materials Index is down 2.24 percent. Agnico Eagle Mines (AEM.TO) is declining 4.44 percent and Franco-Nevada (FNV.TO) is losing 3.09 percent. Silver Wheaton (SLW.TO) is surrendering 3.16 percent and Potash Corp. of Saskatchewan (POT.TO) is decreasing 0.65 percent.

The Diversified Metal and Mining Index is declining 1.99 percent. First Quantum Minerals (FM.TO) is falling 2.23 percent and HudBay Minerals (HBM.TO) is losing 5.93 percent. Lundin Mining (LUN.TO) is decreasing 1.40 percent and Sherritt International (S.TO) is lower by 1.52 percent. Capstone Mining (CS.TO) is sinking 7.04 and Teck Resources (TCK-A.TO) is weakening by 5.11 percent.

The Energy Index is decreasing 0.74 percent. Crude oil prices are near recent 6-year lows amid evidence that U.S inventories continue to build.

Crescent Point Energy (CPG.TO) is lower by 3.58 percent and Cenovus Energy (CVE.TO) is declining 0.57 percent. Canadian Natural Resources (CNQ.TO) is decreasing 1.66 percent and Encana (ECA.TO) is dropping 5.47 percent. Suncor Energy (SU.TO) is down 0.28 percent and Husky Energy (HSE.TO) is lower by 2.36 percent.

The heavyweight Financial Index is dipping 0.02 percent. Bank of Montreal (BMO.TO) is lower by 0.34 percent.

The Capped Information Technology Index is up 0.86 percent. Sierra Wireless (SW.TO) is advancing 2.59 percent and Constellation Software (CSU.TO) is rising 0.08 percent. BlackBerry (BB.TO) is gaining 2.57 percent and Descartes Systems Group (DSG.TO) is higher by 0.60 percent. Avigilon (AVO.TO) is also climbing 3.31 percent.

The Capped Industrials Index is higher by 0.45 percent. Air Canada (AC.TO) is up 0.77 percent and Canadian National Railway (CNR.TO) is rising 0.96 percent. Bombardier (BBD-A.TO) is climbing 3.05 percent and CAE (CAE.TO) is adding 0.39 percent.

Canadian Pacific Railway (CP.TO) is gaining 0.11 percent. The company has presented a revised, enhanced offer for Norfolk Southern Corp. that will give its shareholders the opportunity to receive for each share of Norfolk Southern US$32.86 in cash, 0.451 shares of stock in the combined CP-Norfolk Southern company, and 0.451 of a contingent value right, which will have a maximum value of US$25.

The Capped Health Care Index is climbing 0.10 percent. Concordia Healthcare (CXR.TO) is up 0.27 percent and Extendicare (EXE.TO) is rising 1.08 percent.

ARC Resources (ARX.TO) is falling 1.05 percent. The company confirmed an eligible dividend of $0.10 per share.

Amaya (AYA.TO) is declining 1.36 percent. The company responded to a lawsuit in Kentucky related to the activities of PokerStars between 2006 and 2011, claiming that the action is "frivolous and without merit."

On the economic front, German business confidence declined in December, reports said Thursday, citing results of a survey by the Ifo Institute. The business climate index fell to 108.7 in December from 109 in November. It was forecast to remain unchanged at 109.

U.K. retail sales recovered at a faster than expected pace in November, official data revealed Thursday. Retail sales expanded 1.7 percent in November from October, when it fell 0.5 percent, the Office for National Statistics said. Economists had forecast a 0.6 percent rise for November.

Eurozone's labor costs growth slowed for the second consecutive quarter in the three months ended September, figures from Eurostat showed Thursday. Hourly labor costs rose at a slower pace of 1.1 percent year-over-year in the third quarter, following a 1.6 percent hike in the preceding quarter. In the first quarter of this year, the rate of growth was 1.9 percent.

Eurozone construction output increased in October after falling in the previous month, figures from Eurostat showed Thursday. Construction output climbed a seasonally adjusted 0.5 percent month-over-month in October, reversing a 0.7 percent decrease in September, which was revised from a 0.4 percent drop. In August, output had risen the same 0.5 percent.

In commodities, crude oil futures for January delivery are down $0.64 or 1.80 percent at $34.88 a barrel.

Natural gas for January is up 0.039 or 2.18 percent at $1.829 per million btu.

Gold futures for February are down $28.80 or 2.67 percent at $1,048.00 an ounce.

Silver for March is down $0.558 or 3.92 percent at $13.69 an ounce.