Canadian Stocks Are Falling On Valeant Weakness -- Canadian Commentary

(RTTNews) - The Canadian stock market is trading modestly to the downside Thursday morning, following the gains of the previous session. Weakness in the healthcare and gold sectors is weighing on the overall market. Healthcare stocks are under pressure after Valeant Pharmaceuticals International (VRX.TO) acknowledged that it received subpoenas from US federal prosecutors seeking information related to how it prices drugs.

Markets in Europe are trading in the green Thursday, following the weakness of the previous three sessions. Concerns over China are holding today's gains in check. Shares of Burberry are under pressure in London due to the challenging environment for luxury goods companies in China.

Markets in the United States are also trading modestly to the upside this morning. The unexpected drop in weekly jobless claims has provided a bit of a boost to investor sentiment.

First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended October 10th, according to a report released by the Labor Department on Thursday, with claims matching their lowest level in over forty years.

The report said initial jobless claims fell to 255,000, a decrease of 7,000 from the previous week's revised level of 262,000. The drop surprised economists, who had expected jobless claims to climb to 270,000 from the 263,000 originally reported for the previous week.

Consumer prices in the U.S. fell in line with estimates in the month of September, the Labor Department revealed in a report on Thursday, although the report also showed that core prices rose slightly more than expected.

The Labor Department said its consumer price index slipped by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to dip by 0.2 percent.

The benchmark S&P/TSX Composite Index is down 29.80 points or 0.21 percent at 13,845.53.

On Wednesday, the index closed up 30.60 points or 0.22 percent, at 13,875.33. The index scaled an intraday high of 13,958.46 and a low of 13,850.88.

The Capped Health Care Index is declining 1.99 percent. Concordia Healthcare (CXR.TO) is down 2.55 percent.

Valeant Pharmaceuticals International (VRX.TO) is losing 6.58 percent. The company responded to a letter from Senator Claire McCaskill concerning the company's products Nitropress and Isuprel. The company said it is reviewing the subpoenas and intends to cooperate with the investigations.

The Gold Index is decreasing by 1.10 percent. Gold added to 4-month highs Thursday morning, bolstered by its safe haven appeal and signs that central banks will continue easy money policies.

Kinross Gold (K.TO) is losing 1.37 percent and Yamana Gold (YRI.TO) is falling 1.51 percent. Goldcorp (G.TO) is declining 1.00 percent and Barrick Gold (ABX.TO) is lower by 1.52 percent. Royal Gold (RGL.TO) is also down 0.94 percent.

The Energy Index is decreasing 1.04 percent. Crude oil prices edged lower Thursday, extending weekly looses despite a weaker U.S. dollar.

Crescent Point Energy (CPG.TO) is down 1.77 percent and Encana (ECA.TO) is falling 1.78 percent. Canadian Natural Resources (CNQ.TO) is lower by 1.45 percent and Suncor Energy (SU.TO) is losing 0.73 percent. Pacific Exploration & Production (PRE.TO) is surrendering 3.86 percent and Legacy Oil + Gas (LEG.TO) is weakening by 1.64 percent.

The Diversified Metal and Mining Index is dipping 0.04 percent. Lundin Mining (LUN.TO) is declining 2.50 percent and Sherritt International (S.TO) is falling 1.92 percent.

The Capped Information Technology Index is gaining 0.60 percent. Constellation Software (CSU.TO) is rising 0.69 percent and BlackBerry (BB.TO) is climbing 0.69 percent. Sierra Wireless (SW.TO) is adding 3.53 percent.

The Capped Industrials Index is up 0.22 percent. Canadian Pacific Railway (CP.TO) is gaining 0.36 percent and Canadian National Railway (CNR.TO) is higher by 0.70 percent. Air Canada (AC.TO) is adding 0.27 percent and AutoCanada (ACQ.TO) is advancing 1.92 percent.

The heavyweight Financial Index is rising 0.13 percent. Bank of Nova Scotia (BNS.TO) is higher by 0.17 percent and Bank of Montreal (BMO.TO) is gaining 0.42 percent. Royal Bank of Canada (RY.TO) is up 0.22 percent and National Bank of Canada is adding 0.69 percent.

Canadian Imperial Bank of Commerce (CM.TO) is decreasing 0.07 percent. The company announced that it is eliminating the fees for Canadians to send money overseas.

The Capped Telecommunication Services Index is higher by 0.57 percent. TELUS (T.TO) is increasing by 0.71 percent and BCE (BCE.TO) is up 0.61 percent. Manitoba Telecom Services (MBT.TO) is gaining 0.34 percent.

The Capped Materials Index is also up 0.07 percent. Agnico Eagle Mines is higher by 0.61 percent and Franco-Nevada (FNV.TO) is adding 0.53 percent. Potash Corp. of Saskatchewan (POT.TO) is up 0.70 percent.

Linamar (LNR.TO) is rising 0.24 percent. The company has offered to buy Montupet S.A. for 771 euros.

Cequence Energy (CQE.TO) is surging 14.58 percent, after it initiated a formal process to explore strategic alternatives with a view to enhancing shareholder value.

On the economic front, China's bank lending increased more than expected in September, data from the People's Bank of China revealed Thursday. Banks extended CNY 1.05 trillion loans in September. Economists had forecast it to rise to CNY 900 billion from CNY 809.6 billion in August.

Germany's manufacturing employment and earnings increased in August, Destatis reported Thursday. In local manufacturing units, nearly 5.4 million people worked in August. Employment increased by about 52,000 or 1 percent from same period of last year.

While the Federal Reserve Bank of New York said its reading on regional manufacturing activity increased in the month of October, the index continued to indicate a contraction in business activity for New York manufacturers.

The New York Fed said its general business conditions index rose to a negative 11.4 in October from a negative 14.7 in September, but a negative reading continues to indicate a contraction in manufacturing activity. Economists had expected the index to climb to a negative 7.0.

After reporting an unexpected contraction in regional manufacturing in the previous month, the Federal Reserve Bank of Philadelphia released a report on Thursday showing that manufacturing conditions continued to weaken in October.

While the Philly Fed said its diffusion index for current activity climbed to a negative 4.5 in October from a negative 6.0 in September, a negative reading continues to indicate a contraction in manufacturing activity. Economists had expected the index to climb to a negative 1.0.

In commodities, crude oil futures for November delivery are down $0.70 or 1.50 percent at $45.94 a barrel.

Natural gas for November is up 0.055 or 2.18 percent at $2.573 per million btu.

Gold futures for December are up $3.30 or 0.28 percent at $1,183.10 an ounce.

Silver for December is down $0.002 or 0.01 percent at $16.115 an ounce.