TSX Ends Higher Despite Japan Recession -- Canadian Commentary

(RTTNews) - Canadian stocks ended higher on Monday, as investors largely ignored some disappointing economic data amid concerns over the health of the global economy as Japan slipped into recession in the third quarter.

The uptick was led mostly by telecommunications, healthcare, gold stocks, while energy stocks was the major loser.

In some disappointing economic news, Japan -- the world's third largest economy, slipped into recession in the third quarter, forcing Prime Minister Sinzo Abe to postpone a second sales tax increase. Prime Minister Abe had earlier hiked sales tax in April earlier this year, which economists believe only hampered growth. Abe is now expected to go in for a snap poll.

In addition to the pullback by the Japanese economy, markets were also concerned over the possibilities of further EU sanctions on Russia for its involvement in eastern Ukraine.

In some other soft economic news, U.S. industrial production unexpectedly declined in October, with falling mining and utilities output offsetting an uptick in manufacturing output, a Federal Reserve report said Monday. Meanwhile, a Federal Reserve Bank of New York report showed a rebound in its index of regional manufacturing activity in November, although short of what analysts expected.

The benchmark S&P/TSX Composite Index closed Monday at 14,882.50, up 39.40 points or 0.27 percent. The index scaled a intraday high of 14,950.53 and a low of 14,825.86.

On Friday, the Index ended higher by 64.33 points or 0.44 percent on a slew of upbeat economic news from the U.S. with investors largely ignoring some soft economic growth data from the eurozone. The index gained more than 1 percent last week.

Crude oil ended lower as the dollar trended higher with Japan unexpectedly slipping into recession in the third quarter, raising concerns over global economic recovery.

The Energy Index shed 0.66 percent, with U.S. crude oil futures for December delivery dropping $0.18 or 0.2 percent to close at $75.64 a barrel on the Nymex Monday.

Among energy stocks, Suncor Energy Inc. (SU.TO) shed 0.96 percent, Talisman Energy Inc. (TLM.TO) gained 2.18 percent, Canadian Oil Sands Limited (COS.TO) dropped 0.92 percent, Cenovus Energy Inc. (CVE.TO) down 1.28 percent, Encana Corp. (ECA.TO) fell 0.40 percent, and Pacific Rubiales Energy Corp. (PRE.TO) gained 0.92 percent.

Canadian Natural Resources Limited (CNQ.TO) fell 1.25 percent, while Enbridge, Inc. (ENB.TO) slipped 0.49 percent.

Gold futures ended lower after having recorded a sharp rise last week, with the dollar trending higher against a basket of major currencies.

The Global Gold Index gained 1.84 percent, with gold for December delivery dropping $2.10 or 0.2 percent to settle at $1,183.50 an ounce on the New York Mercantile Exchange Monday.

In the gold space, Kinross Gold Corp. (K.TO) shedding 0.92 percent, Goldcorp Inc. (G.TO) added 0.82 percent, Barrick Gold Corp. (ABX.TO) gained 1.74 percent, Yamana Gold Inc. (YRI.TO) gathered 2.75 percent, and Eldorado Gold Corp. (ELD.TO) moved up 2.00 percent. Detour Gold Corp. (DGC.TO) up 1.81 percent.

IAMGOLD Corp. (IMG.TO) soared 7.53 percent after having announced some major cost cutting measures last week.

The Capped Materials Index gained 1.06 percent, although Potash Corp. of Saskatchewan Inc. (POT.TO) advancing 0.47 percent.

The Healthcare Index gained 0.99 percent, with Catamaran Corp. (CCT.TO) adding 1.39 percent and Extendicare Inc. (EXE.TO) dropping 0.72 percent.

Valeant Pharmaceuticals International, Inc. (VRX.TO) gained 1.93 percent after acquiring Nicox Inc., the U.S. diagnostics unit of Nicox S.A. (COX), for about $20 million.

The heavyweight Financial Index moved up 0.18 percent, as Bank of Nova Scotia (BNS.TO) gained 0.16 percent, Toronto-Dominion Bank (TD.TO) up 0.30 percent, Canadian Imperial Bank of Commerce (CM.TO) added 0.10 percent, and Bank of Montreal (BMO.TO) dropped 0.30 percent. National Bank of Canada (NA.TO) gained 0.90 percent, while Royal Bank of Canada (RY.TO) edged up 0.02 percent.

The Diversified Metals & Mining Index added 0.37 percent, with First Quantum Minerals Ltd. (FM.TO) down 0.80 percent, Teck Resources Limited (TCK.B.TO) gaining 0.99 percent, and Sherritt International Corp. (S.TO) up 0.36 percent.

The Capped Industrials Index moved up 0.23 percent, with Bombardier Inc. (BBD.B.TO) down 2.14 percent and Air Canada (AC) up 0.21 percent.

The Information Technology Index inched up 0.02 percent with smartphone maker BlackBerry Limited (BB.TO) plunging 8.01 percent.

The Telecom Index jumped 1.43 percent with Rogers Communications Inc. (RCI.B.TO) up 1.87 percent, TELUS Corp. (T.TO) up 1.36 percent, and BCE Inc. (BCE.TO) up 1.21 percent.

The Consumer Discretionary Index added 0.56 percent, with Tim Hortons Inc. (THI.TO) nudging up 0.01 percent.

The Consumer Staples Index lost 0.65 percent, with Saputo Inc. (SAP.TO) down 0.48 percent and Metro Inc. (MRU.TO) down 0.20 percent.

Onex Corp (OCX.TO) gained 0.56 percent after reports emerged the company is leading a bid for Swiss juice-box maker SIG Combibloc Group AG. Reports indicate Onex may reach an agreement to buy SIG for more than $4 billion as early as this week.

Osisko Gold Royalties Ltd. (OE.TO) shed 3.63 percent after agreeing to combine with Virginia Mines Inc for about $479 million. The merger will establish a royalty company with a market capitalization of nearly C$1.3 billion or US$1.15 billion.

In economic news from the U.S., industrial production unexpectedly saw a modest decline in October, a report from the Federal Reserve showed Monday, with falling mining and utilities output offsetting an uptick in manufacturing output. Industrial production edged down by 0.1 percent in October following a downwardly revised 0.8 percent increase in September. Economists expected production to inch up by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month.

A Federal Reserve Bank of New York report on Monday showed a rebound in its index of regional manufacturing activity in November, after a substantial slowdown in the pace of growth in the New York manufacturing sector in the previous month. The New York Fed's general business conditions index climbed to 10.2 in November from 6.2 in October. Economists expected the index to rise to a reading of 11.0.

Japan said its economy unexpectedly contracted by an annualized 1.6 percent in the July-September quarter, following a 7.3 percent contraction in the prior quarter. Economists expected the economy to grow by 2.1 percent.

Eurozone trade surplus increased to a seasonally adjusted EUR 17.7 billion from EUR 15.4 billion in August, data from Eurostat showed Monday. Exports grew 4.2 percent in September from August, when it fell 1.4 percent. Similarly, imports rose 3 percent reversing the 3.2 percent drop a month ago.

Germany's Bundesbank on Monday reiterated its opposition to increasing investment to boost the German economy as well as the euro area, indicating the biggest Eurozone economy is likely to register only a modest growth in the final three months of the year. In its monthly report, the bank said any additional debt-financed economic stimulus package would do little to support the economic situation in Germany.

The German Central Bank said the comparatively small stimuli it can provide also would not be of much benefit to the Eurozone. During the current uncertain economic situation, it was appropriate to continue the fiscal policy reforms to boost the economy, the Bundesbank said.

Traders are also looking ahead to some crucial economic data, including reports on U.S. housing market and manufacturing activity, this week.