Canadian Stocks Are Falling On Energy Weakness -- Canadian Commentary

(RTTNews) - The Canadian stock market was up in early trade Wednesday, but has since slipped into negative territory. Bargain hunting provided a boost in early trade, but those gains eroded after a U.S. government report showed that crude inventories increased by much more than anticipated.

The EIA reported that U.S. crude inventories rose by 4.7 million barrels in the previous week. Expectations had been for an increase of 32,000 barrels.

U.S. President Obama also has amassed enough support in the Senate to push through the nuclear deal with Iran. An influx of Iranian oil to the already oversupplied market could drive crude oil prices further to the downside.

Markets in Europe are trading in the green Wednesday, in an attempt to bounce back from yesterday's China fueled weakness. Bargain hunting is largely responsible for the gains on this light day for economic news.

Markets in the United States are also positive this morning. A notable increase in private sector employment ahead of Friday's jobs report has encouraged investors. The larger than expected rise in labor productivity has also contributed to the positive mood.

Employment in the U.S. private sector saw a notable increase in the month of August, according to a report released by payroll processor ADP on Wednesday, although the pace of job growth fell short of economist estimates.

ADP said private sector employment climbed by 190,000 jobs in August following a downwardly revised increase of 177,000 jobs in July. Economists had expected employment to jump by about 210,000 jobs compared to the increase of 185,000 jobs originally reported for the previous month.

Labor productivity in the U.S. jumped by much more than previously estimated in the second quarter, the Labor Department revealed in a report on Wednesday.

The report said labor productivity surged up by 3.3 percent in the second quarter, reflecting a notable upward revision from the previously reported 1.3 percent growth. Economists had expected the pace of growth to be upwardly revised to 2.8 percent.

Meanwhile, the Labor Department also said unit labor costs fell by 1.4 percent in the second quarter compared to the previously reported 0.5 percent increase. Costs had been expected to be revised to show a drop of 1.2 percent.

The benchmark S&P/TSX Composite Index is down 26.94 points or 0.20 percent at 13,454.96.

On Tuesday, the index closed down 377.22 points or 2.72 percent, at 13,481.90. The index scaled an intraday high of 13,691.80 and a low of 13,419.12.

The Capped Telecommunication Services Index is advancing by 1.14 percent. TELUS (T.TO) is up 1.12 percent and BCE (BCE.TO) is gaining 1.46 percent. Manitoba Telecom Services (MBT.TO) is also rising by 0.67 percent.

The Capped Health Care Index is climbing by 1.17 percent. Concordia Healthcare (CXR.TO) is advancing by 2.30 percent and Catamaran (CCT.TO) is up 0.15 percent.

Valeant Pharmaceuticals International (VRX.TO) is higher by 0.50 percent. The company has agreed to acquire Synergetics USA, Inc. (SURG) for $6.50 per share in cash.

The Capped Information Technology Index is gaining 0.56 percent. BlackBerry (BB.TO) is increasing by 0.62 percent and Descartes Systems Group (DSG.TO) is up 0.48 percent. Constellation Software (CSU.TO) is higher by 1.05 percent and Sierra Wireless (SW.TO) is advancing by 0.74 percent.

The Energy Index is tumbling by 2.25 percent. Crude oil prices have turned decidedly lower after U.S. inventories increased by much more than expected.

Cenovus Energy (CVE.TO) is falling by 1.18 percent and Canadian Natural Resources (CNQ.TO) is lower by 0.32 percent. Crescent Point Energy (CPG.TO) is weakening by 0.50 percent and Vermillion Energy (VET.TO) is losing 0.25 percent.

Enbridge (ENB.TO) is rising by 0.80 percent, after it closed the transfer of its Canadian Liquids Pipeline Business and certain Canadian renewable energy assets to Enbridge Income Fund for consideration of $30.4 billion plus additional incentive rights.

The Gold Index is falling by 1.42 percent. Gold prices were flat Wednesday as equities look to stabilize after Tuesday's brutal sell-off.

Goldcorp (G.TO) is down 0.38 percent and Barrick Gold (ABX.TO) is losing 2.48 percent. Eldorado Gold (ELD.TO) is decreasing by 3.64 percent and Kinross Gold (K.TO) is lower by 2.23 percent. B2Gold (BTO.TO) is declining by 0.63 percent and Yamana Gold (YRI.TO) is surrendering 1.70 percent.

The Capped Materials Index is also down 0.67 percent. Agnico Eagle Mines (AEM.TO) is down 0.97 percent and Silver Wheaton (SLW.TO) is declining by 3.39 percent. Agrium (AGU.TO) lower by 0.56 percent.

The heavyweight Financial Index is rising by 0.08 percent. National Bank of Canada (NA.TO) is decreasing by 0.35 percent and Bank of Montreal (BMO.TO) is losing 0.23 percent. Canadian Imperial Bank of Commerce (CM.TO) is lower by 0.05 percent and Royal Bank of Canada (RY.TO) is declining by 0.15 percent.

Bank of Nova Scotia (BNS.TO) is gaining 0.24 percent and Toronto-Dominion Bank (TD.TO) is up 0.31 percent.

The Capped Industrials Index is down 0.08 percent. AutoCanada (ACQ.TO) is falling by 2.68 percent and Finning International (FTT.TO) is decreasing by 0.66 percent.

AutoCanada (AC.TO) is weakening by 0.74 percent. The company is being sued for going back on a deal where it accidentally offered $8,000 fares for $800.

Bombardier (BBD-A.TO) is climbing by 3.10 percent. The company announced that its Chinese joint venture, Bombardier Sifang (Qingdao) Transportation Ltd. has been awarded a contract with China Railway Corp. to supply 15 CRH380D very high speed trains.

On the economic front, Eurozone's producer prices declined at a stable rate in July, in line with expectations, figures from Eurostat showed Wednesday. The producer price index fell 2.1 percent year-over-year in July, the same rate of decrease as in the previous month, revised down from the 2.2 percent drop reported earlier.

British construction sector sustained its robust growth in August, albeit at a slower pace, with continued boost from the housing sector and new impetus from the commercial sector. The seasonally adjusted Markit/CIPS UK Construction Purchasing Managers' Index rose to 57.3 from 57.1 in July, survey results from the Chartered Institute of Procurement and Supply and Markit Economics revealed Wednesday. Economists had forecast a higher score of 57.5.

In commodities, crude oil futures for October delivery are down $1.11 or 2.44 percent at $44.30 a barrel.

Natural gas for October is down 0.038 or 1.44 percent at $2.664 per million btu.

Gold futures for December are down $2.50 or 0.22 percent at $1,137.30 an ounce.

Silver for December is up $0.105 or 0.72 percent at $14.725 an ounce.