TSX Ends Lower On Weak Commodity Prices -- Canadian Commentary

(RTTNews) - Canadian stocks snapped a three-day gain to end lower on Thursday, tracking declining global equity markets, as commodity prices dropped led by a sharp decline in crude oil prices. Concerns over European volatility also contributed to the sharp drop in global markets.

All major sectors of the main index ended in the red, with mining, energy and materials stocks among the weakest performers, due mainly to falling commodity prices.

Greece and its international creditors agreed on a few aspects, with Greece informing the International Monetary Fund that it will combine four debt payments due in June into a single payment by the month end. The beleaguered country is reported to have reached an agreement on some aspects with its creditors after several protracted negotiations.

However, several differences persist with Greece's mounting debt and the austerity measures it has to take.

Meanwhile, the Bank of England left its record low key interest rate and the size of the quantitative easing unchanged.

Markets in the United States also ended in the red, with the recent sell-off in bonds partly responsible for the weakness. The sharp pullback by bonds over the past 3 sessions has led to a subsequent jump in yields. Traders also stayed on the sidelines ahead of Friday's employment report for May.

Meanwhile, the International Monetary Fund has suggested the Federal Reserve delay raising interest rates until next year, following its latest consultation on the U.S. economy. The IMF's call for delaying the first rate hike came after lowering its forecast for U.S. economic growth this year to 2.5 percent from 3.1 percent.

The U.S. economy continued to plod along after another rough winter, according to the latest Federal Reserve Beige Book released on Wednesday. Seven districts reported "moderate" or "modest" growth in May, while others described growth as "slight," "mixed," or "steady."

In some positive economic news, first-time claims for U.S. unemployment benefits declined modestly in the week ended May 30, a report from the Labor Department said Thursday.

U.S. labor productivity fell more than expected in the first quarter of 2015, reflecting a much bigger than previously estimated drop in output, a Labor Department report on Thursday said.

The benchmark S&P/TSX Composite Index closed Thursday at 15,019.39, down 135.39 points or 0.89 percent. The index scaled an intraday high of 15,114.51 and a low of 14,957.57.

On Wednesday, the index closed up 49.94 points or 0.33 percent, at 15,154.68. The index scaled an intraday high of 15,182.22 and a low of 15,104.04.

Gold futures ended at a near five-week low for a second session on Thursday, after some upbeat economic data from the U.S. with initial claims for unemployment benefits declining more than expected last week, fueling expectations of a strong jobs report.

The Gold Index shed 0.69 percent, although gold for August delivery gained $1.00 or 0.1 percent to settle at $1,189.80 an ounce on the New York Mercantile Exchange Friday.

Among gold stocks, Goldcorp Inc. (G.TO) dropped 0.41 percent, Barrick Gold Corp. (ABX.TO) fell 2.08 percent, and Eldorado Gold Corp. (ELD.TO) slipped 0.70 percent.

The Capped Materials Index dropped 1.24 percent, with Agrium Inc. (AGU.TO) falling 0.79 percent. Agnico Eagle Mines Limited (AEM.TO) dipped 0.03 percent, while Franco-Nevada Corp. (FNV.TO) slipped 0.99 percent. Potash Corp. of Saskatchewan Inc. (POT.TO) dropped 1.74 percent.

Crude oil futures slumped to end at a one-week low ahead of the crucial meeting of the Organization of the Petroleum Exporting Countries on Friday in Vienna. A weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories dropped 1.9 million barrels from the previous week.

The Energy Index dropped 1.41 percent, with U.S. crude oil futures for July delivery, the most actively traded contract, soaring $2.62 or 4.5 percent, to settle at $60.30 a barrel on the New York Mercantile Exchange Friday.

Among energy stocks, Suncor Energy Inc. (SU.TO) fell 0.47 percent, while Crescent Point Energy Corp. (CPG.TO) shed 2.50 percent. Encana Corp. (ECA.TO) dropped 2.89 percent, and Canadian Natural Resources Limited (CNQ.TO) surrendered 0.68 percent.

Canadian Oil Sands Limited (COS.TO) fell 3.76 percent, while Pacific Rubiales Energy Corp. (PRE.TO) dropped 3.76percent.

The Diversified Metals & Mining Index dived 2.28 percent, as First Quantum Minerals Ltd. (FM.TO) shed 3.08 percent, Lundin Mining Corp. (LUN.TO) fell 2.37 percent, and Sherritt International Corp. (S.TO) plunged 7.31 percent. Teck Resources (TCK.B.TO) dived 2.93 percent.

The heavyweight Financial Index fell 0.55 percent, as National Bank of Canada (NA.TO) dipped 1.29 percent, and Bank of Montreal (BMO.TO) fell 1.27 percent.

Bank of Nova Scotia (BNS.TO) surrendered 0.60 percent, while Toronto-Dominion Bank (TD.TO) fell 0.80 percent. Royal Bank of Canada (RY.TO) declined 0.31 percent, and Canadian Imperial Bank of Commerce (CM.TO) fell 0.55 percent.

Canadian Western Bank (CWB.TO) dipped 1.22 percent, after reporting second quarter earnings of C$0.67 per share, compared to C$0.63 per share last year. The company also increased its quarterly dividend by 5 percent.

The Capped Health Care Index shed 0.36 percent as Valeant Pharmaceuticals International, Inc. (VRX.TO) dropped 2.31 percent. Concordia Healthcare Corp. (CXR.TO) added 0.94 percent, and Catamaran Corp. (CCT.TO) moved up 1.07 percent.

The Capped Industrials Index dropped 0.38 percent, as Finning International Inc. (FTT.TO) shed 2.58 percent. Canadian Pacific Railway Limited (CP.TO) added 0.86 percent, while Canadian National Railway (CNR.TO) gained 0.33 percent. CAE Inc. (CAE.TO) shed 0.27 percent, while Air Canada (AC.TO) fell 1.59 percent.

Bombardier Inc. (BBD-A.TO) shed 3.08 percent. The company was awarded a contract to manufacture and maintain up to 156 FLEXITY Vienna trams for the Vienna transport authority.

The Information Technology Index dipped 0.04 percent, after Sierra Wireless, Inc. (SW.TO) fell 4.22 percent and Descartes Systems Group Inc. (DSG.TO) shed 1.33 percent. However, BlackBerry Inc. (BB.TO) gained 0.74 percent and Constellation Software Inc. (CSU.TO) added 1.55 percent.

The Capped Telecommunication Index slipped 0.25 percent, as Rogers Communications Inc. (RCI.B.TO) dipped 0.04 percent, TELUS Corp. (T.TO) dropped 0.12 percent, and BCE Inc. (BCE.TO) surrendered 0.20 percent.

Andrew Peller (ADW-A.TO) gained 2.60 percent, after the company's Board announced a 7.1 percent dividend increase. The company also reported an 11 percent increase in fourth quarter adjusted earnings.

On the economic front, Canada's Ivey PMI increased to 62.3 in May, from 58.2 in April. Economists had expected the index to fall to 55.5 for the month.

First-time claims for U.S. unemployment benefits declined modestly in the week ended May 30, a report from the Labor Department showed Thursday. Initial jobless claims edged down to 276,000, a decrease of 8,000 from the previous week's revised level of 284,000. Economists expected claims to slip to 278,000 from the 282,000 originally reported for the previous week.

U.S. labor productivity fell more than expected in the first quarter of 2015, reflecting a much bigger than previously estimated drop in output, a Labor Department report on Thursday said. Productivity in the first quarter tumbled by a revised 3.1 percent compared to the previously reported 1.9 percent decrease. Economists expected a revised decrease of about 2.9 percent, which would still reflect a notable acceleration from the 2.1 percent drop seen in the fourth quarter.

Meanwhile, the report also said unit labor costs jumped by an upwardly revised 6.7 percent in the first quarter as compared to the previously reported 5.0 percent increase. Costs had been expected to surge up by a revised 6.0 percent.

From Europe, German construction sector activity slowed in May, reaching its lowest in four month as civil engineering activity declined, survey data from Markit Economics showed Thursday. The seasonally adjusted purchasing managers' index, or PMI, for the construction sector, declined to 50.8 in May from 51.0 in the previous month.

French unemployment rate decreased unexpectedly in the first quarter, though slightly, data from the statistical office Insee showed Thursday. The jobless rate, measured according to International Labour Organisation standards, edged down to 10.3 percent in the three months ended March from 10.4 percent in the fourth quarter. Economists had expected the rate to remain stable at 10.4 percent.

U.K. house prices dropped for the first time in three months in May, data from Lloyds Banking Group's Halifax division showed Thursday. House prices edged down unexpectedly by 0.1 percent month-on-month in May, reversing April's 1.6 percent increase. This was the first fall since February. Prices were forecast to grow 0.2 percent from April.