TSX Ends Lower After Yellen Comments, Inflation Data -- Canadian Commentary

(RTTNews) - Canadian stocks ended a tad lower Friday, ahead of the U.S. Memorial Day holiday weekend, on weakness in commodity prices and after some hawkish remarks from U.S. Federal Reserve Chair Janet Yellen, who said the central bank will likely raise interest rates this year, as long as economic activity picks up.

Investors also weighed data that showed the U.S. consumer price index to have risen in line with economists' estimates, even as core prices rose more than expected.

Markets in Europe turned in a mixed performance at the end of the trading week. Concerns over Greece continued to weigh on investor sentiment. At the end of talks in Riga, Latvia on Thursday, German Chancellor Angela Merkel said much more work needs to be done to provide bailout funds for Greece.

Markets in the United States were under pressure, with the S&P 500 and the Dow Jones are ending in the red. The Nasdaq was modestly positive earlier in the day, but also closed in negative territory. Corporate results have been mixed at the end of the week, with better than expected results from Hewlett-Packard, but disappointing numbers from the Gap.

Meanwhile, Federal Reserve chair Janet Yellen towed the FOMC stand, stating that an interest rate hike is indicated some time this year, depending on the health of the U.S. economy.

Nevertheless, Yellen stressed the pace of rate hikes would be gradual and several years before the benchmark Fed Funds Rate returns to normal. The Fed Chief expects the economy to perform better for the reminder of the year, blaming the first quarter debacle on some severe winter and the West Coast labor disputes.

The benchmark S&P/TSX Composite Index closed Friday at 15,200.76, down 2.85 points or 0.02 percent. The index scaled an intraday high of 15,218.02 and a low of 15,139.16.

On Thursday, the index closed up 130.78 points or 0.87 percent, at 15,203.61. The index scaled an intraday high of 15,230.72 and a low of 15,092.25.

The Diversified Metals & Mining Index gained 0.26 percent, as First Quantum Minerals Ltd. (FM.TO) added 1.17 percent, Teck Resources Limited (TCK.B.TO) fell 0.58 percent, Lundin Mining Corp. (LUN.TO) moved up 1.04 percent, and Sherritt International Corp. (S.TO) dived 4.26 percent.

Gold futures ended a tad lower on Thursday, as the dollar trended higher against a basket of major currencies and U.S. consumer inflation rising strongly, even as investors mulled over the Federal Reserve's stand on interest rate hikes.

The Gold Index inched up 0.04 percent, with gold for June delivery shedding $0.10 to settle at $1,204.00 an ounce an ounce on the New York Mercantile Exchange Friday.

Among gold stocks, Barrick Gold Corp. (ABX.TO) dropped 0.53 percent, Goldcorp Inc. (G.TO) added 0.22 percent, and Yamana Gold Inc. (YRI.TO) fell 0.64 percent. Eldorado Gold Corp. (ELD.TO) gained 1.68 percent

The Capped Materials Index moved up 0.06 percent, with Potash Corp. of Saskatchewan Inc. (POT.TO) down 0.32 percent and Agrium Inc. (AGU.TO) slipped 0.05 percent.

Agnico Eagle Mines Limited (AEM.TO) gained 0.35 percent, Franco-Nevada Corp. (FNV.TO) moved up 0.53 percent, and Silver Wheaton Corp. (SLW.TO) fell 0.46 percent.

U.S. crude oil ended lower amid tensions in the Middle East and speculation that Federal Reserve will delay raising interest rates.

The Energy Index dipped 0.16 percent, with U.S. crude oil futures for July delivery, the most actively traded contract, shedding $1.00 or 1.7 percent, to settle at $59.72 a barrel on the New York Mercantile Exchange Friday.

Among energy stocks, Suncor Energy Inc. (SU.TO) added 0.71 percent, while Crescent Point Energy Corp. (CPG.TO) jumped 5.79 percent. Cenovus Energy Inc. (CVE.TO) dropped 1.57 percent, and Canadian Natural Resources Limited (CNQ.TO) shed 0.62 percent.

Canadian Oil Sands Limited (COS.TO) dropped 0.27 percent, while Legacy Oil + Gas (LEG.TO) fell 2.01 percent.

Pacific Rubiales Energy Corp. (PRE.TO) fell 3.02 percent.

The heavyweight Financial Index shed 0.24 percent, as Bank of Nova Scotia (BNS.TO) dropped 0.57 percent, Toronto-Dominion Bank (TD.TO) advanced 0.11 percent, and Royal Bank of Canada (RY.TO) inched up 0.04 percent. Canadian Imperial Bank of Commerce (CM.TO) dropped 0.19 percent.

National Bank of Canada (NA.TO) dropped 0.68 percent, while Bank of Montreal (BMO.TO) fell 0.13 percent.

The Capped Health Care Index added 0.45 percent as Valeant Pharmaceuticals International Inc. (VRX.TO) gained 2.25 percent, Concordia Healthcare Corp. (CXR.TO) slipped 0.64 percent, and Catamaran Corp. (CCT.TO) gathered 0.94 percent.

The Capped Industrials Index added 0.46 percent, as Finning International Inc. (FTT.TO) gained 1.57 percent, Air Canada (AC.TO) fell 0.47 percent. Canadian Pacific Railway Limited (CP.TO) gained 0.89 percent, and Canadian National Railway (CNR.TO) declined 0.12 percent.

Bombardier Inc. (BBD-A.TO) fell 1.17 percent.

The Information Technology Index gained 0.76 percent, as Descartes Systems Group Inc. (DSG.TO) dropped 0.96 percent, Constellation Software Inc. (CSU.TO) dropped 1.17 percent and Sierra Wireless, Inc. (SW.TO) dropped 1.27 percent.

BlackBerry Inc. (BB.TO) gained 2.71 percent.

The Capped Telecommunication Index advanced 0.29 percent, as Rogers Communications Inc. (RCI.B.TO) gained 0.30 percent, TELUS Corp. (T.TO) added 0.57 percent, and BCE Inc. (BCE.TO) moved up 0.26 percent.

On the economic front, Canadian consumer price index rose by 0.8 percent in April, according to a report from Statistics Canada this morning. Economists had expected an increase of 1.0 percent.

Statistics Canada also reported this morning that Canadian retail sales increased by 0.7 percent in March. Economists had been expecting retail sales to rise by 0.3 percent.

Elsewhere, consumer prices in the U.S. rose by 0.1 percent in April after rising by 0.2 percent in each of the two previous months. The modest increase was in line with economists' estimates. Nevertheless, core prices,which excludes food and energy, increased 0.3 percent with economists anticipating a rise of 0.1 percent.

German business confidence weakened marginally from a 10-month high in May and the economy grew at a slower pace in the first quarter, as initially estimated, revealed two separate reports released Friday.

The business confidence index fell less-than-expected to 108.5 in May from 108.6 in April, according to a survey by Munich-based Ifo Institute. This was the first fall in seven months but the index came in above the economists' estimate of 108.3.

Germany's economic growth eased as estimated in the first quarter largely due to the weakness in foreign trade, final data from Destatis showed Friday. Gross domestic product grew 0.3 percent sequentially in the first quarter, slower than the 0.7 percent expansion seen in the fourth quarter.

The total value of new orders received by the German construction industry declined in March, figures from Destatis showed Friday. Orders in the construction sector fell a seasonally and working-day-adjusted 2.2 percent month-over-month in March.

French consumer confidence improved unexpectedly in May to the strongest level since August 2011, survey data from the statistical office Insee showed Friday. The manufacturing confidence index rose slightly to 103 in May from 102 in the previous month, which was revised from a reading of 101. Economists had expected the index to remain stable at 101.

The U.K. budget deficit narrowed in April from last year, data published by the Office for National Statistics showed Friday. Public sector net borrowing excluding banks declined by GBP 2.5 billion to GBP 6.8 billion in April.

British households perceive that the value of their home increased in May, a survey from Knight Frank and Markit Economics showed Friday. The house price sentiment index, or HPSI, fell slightly to 58.0 in May from 58.2 in the previous month. However, a reading above 50 indicates a rise in house prices. This marked the twenty-sixth successive month of the index remaining above 50.