TSX Settles Lower On U.S. Debt, Budget Concerns - Canadian Commentary

(RTTNews) - Canadian stocks settled lower on Wednesday, tracking declining global equity markets amid worries the partial U.S. Government shutdown could drag on and may falter on any agreement to raise the country's debt ceiling. The U.S. Government shutdown partially after Republicans and Democrats failed to reach an agreement on a new spending bill.

The U.S. government was forced into a partial shutdown at midnight on Monday, with the Democrats and Republicans failing to reach a consensus. At the crux was President Barack Obama's Affordable Care Act, which Democrats say will provide health insurance at reasonable rates but which Republicans believe is unconstitutional and likely to hurt business.

Even as investors focused on talks of raising the U.S. public debt ceiling later this month, political uncertainty in Italy eased after Prime Minister Enrico Letta won a vote of confidence after Silvio Berlusconi averted a major catastrophe and backtracked at the last-minute in favor of the prime minister.

The S&P/TSX Composite Index closed Wednesday at 12,839.00, down 8.44 points or 0.07 percent. The index touched an intraday high of 12,853.29 and a low of 12,790.07.

The Diversified Metals & Mining Index added 0.79 percent, with Teck Resources Limited (TCK.B.TO) up 1.71 percent and Lundin Mining Corp. (LUN.TO) up 0.22 percent. Osisko Mining Corp. (OSK.TO) gained 1.00 percent.

The Capped Materials Index gained 1.25 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) adding 3.23 percent.

Gold futures bounced back to end sharply higher on Wednesday, with investors seeking the safe haven appeal of the precious metal with the U.S. Government partially shutdown. Gold plunged over three percent yesterday on a sell-off with investors mulling the shutdown impact on demand for the precious metal.

The Global Gold Index added 0.84 percent, with gold futures for December delivery surging $34.60 or 2.7 percent to close at $1,320.70 an ounce Wednesday on the Nymex.

Yamana Gold Inc. (YRI.TO) slipped 0.29 percent, while IAMGOLD Corp. (IMG) edged up 0.21 percent. B2Gold Corp. (BTO.TO) added 1.62 percent, while Goldcorp Inc. (G.TO) added 0.96 percent. Kinross Gold Corp. (K.TO) slipped 0.79 percent, while Eldorado Gold Corp. (ELD.TO) dropped 0.59 percent.

Barrick Gold Corp. (ABX.TO) gained 2.26 percent after announcing the completion of its divestiture of Yilgarn South assets in Western Australia to Gold Fields Limited. The company also maintained its 2013 gold production guidance of 7.0 to 7.4 million ounces at AISC of $900-$975 per ounce.

The weekly oil report from the Energy Information Administration showed U.S. crude oil inventories to have moved up by 5.50 million barrels and gasoline stocks up 3.50 million barrels in the week ended September 27. Analysts expected U.S. crude oil inventories to add 2.5 million barrels and gasoline stocks to shed 0.70 million barrels last week.

The Energy Index shed 0.75 percent, although U.S. crude oil futures for November delivery surged $2.06 or 2 percent to close at $104.10 a barrel Wednesday on the Nymex.

Among energy stocks, Canadian Natural Resources Limited (CNQ.TO) dropped 1.80 percent, Talisman Energy Inc. (TLM.TO) gained 3.39 percent, and Suncor Energy Inc.(SU.TO) was down 0.92 percent. Enbridge Inc. (ENB.TO) moved up 0.26 percent, while Imperial Oil Limited (IMO.TO) shed 1.13 percent.

The Financial Index dropped 0.44 percent with Bank of Montreal (BMO.TO) down 0.25 percent and Manulife Financial Corp. (MFC.TO) shedding 0.81 percent. The Bank of Nova Scotia (BNS.TO) slipped 0.49 percent, while Toronto-Dominion Bank (TD.TO) was down 0.28 percent. Royal Bank of Canada (RY.TO) slipped 0.54 percent, while National Bank of Canada (NA.TO) dipped 0.06 percent.

The Information Technology Index moved up 0.46 percent, with smartphone maker BlackBerry Limited (BB.TO) up 0.98 percent.

The Capped Industrials Index added 0.51 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) dropping 1.04 percent and Air Canada (AC.B.TO) gaining 4.00 percent.

Neptune Technologies & Bioressources (NTB.TO) jumped 16.09 percent after announcing a strategic non-exclusive krill oil manufacturing and supply agreement with Rimfrost USA, LLC. The deal gives Neptune the right to purchase, at a preferred price, up to 800 metric tons of krill oil during the first three-year term of the renewable agreement.

Engine Capital LP, a shareholder of Vitran Corp. Inc. (VTN.TO) with ownership of more than 3.5 percent of the shares outstanding, urged Vitran Board to immediately initiate a broad sale process to maximize shareholder value. Vitran shares rose 6.94 percent..

In a report that may take on increased importance due to the likely delay of the government report, payroll processor ADP's report on Wednesday showed private sector employment in the U.S. to have increased less than expected in September. The report showed private sector added 166,000 jobs in September compared to a downwardly revised increase of 159,000 jobs in August. Economists expected private sector employment to increase by about 180,000 jobs compared to the addition of 176,000 jobs originally reported for the previous month.

Meanwhile, the Asian Development Bank (ADB), on Wednesday slashed its economic growth forecast for developing Asia, citing moderate economic activity in China and India as well as widespread concerns that possible tapering of U.S. stimulus program could impact growth in the region. In an update to its flagship annual publication Asian Development Outlook, ADB revised down its 2013 gross domestic product growth forecast for the region to 6 percent from 6.6 percent predicted in April. For 2014, the growth is now projected at 6.2 percent, down from 6.7 percent in April. In 2012, GDP rose 6.1 percent.

From the eurozone, a survey by Markit showed that the growth in the construction sector in the U.K. unexpectedly slowed in September. The headline construction purchasing managers' index fell to 58.9 in September from a near six-year high of 59.1 in August. Economists had forecast an increase in the index to 59.5.

Meanwhile, the European Central Bank retained its refi rate at a record low 0.50 percent, as widely expected.