Friday, August 5, 2011

Stock Market News

The Toronto stock market tumbled again Friday, a day after investors punished stocks and sparked the worst one-day decline in two years, with no comfort coming from a stronger-than-expected reading on U.S. employment.
The S&P/TSX composite index fell 147.42 points or 1.2 per cent to 12,232.71, led by sliding resource stocks as investors feel slowing economic conditions will heavily impact demand. The TSX Venture Exchange was off 25.77 points to 1,827.56.
It had been hoped that a decent jobs number from the U.S. would lessen anxiety about the state of the influential American economy.
But the announcement that 117,000 were created in July was simply not enough to brighten investors' mood, said Andrew Pyle, investment adviser with ScotiaMcLeod in Peterborough, Ont.
"These aren't great numbers, right?," Pyle said.
"They're not amazing numbers, not amazing headlines — when was the last time we got excited over 117,000 increase in jobs?"
Meanwhile, stock market operator TMX Group said it was investigating an early problem with index data — there was an initial positive reading shortly after the market open, which stayed unchanged for the next 10 minutes.
The U.S. Labour Department's non-farm payrolls report Friday said employment rose by 117,000 in July, higher than the approximately 80,000 jobs that economists expected. Also, the jobless rate edged down 0.1 per cent to 9.1 per cent.
There was more good news: the data also showed that the economy created 56,000 jobs more than originally thought.
The data came out a day after pessimism over the U.S. economy and the big debt problems facing eurozone countries such as Spain and Italy pushed the TSX down 436 points.
The Canadian dollar was down 0.04 of a cent to 102.05 cents US as traders also took in data showing that Canadian job growth for July came in at 7,100, less than half what economists expected.
However, analysts pointed out that the details of the report were more encouraging.
"Full-time jobs rose 25,500 and private sector employment rocketed a massive 94,500, more than offsetting a big drop in public sector jobs," observed BMO Capital Markets deputy chief economist Doug Porter.
Also, the jobless rate declined 0.2 of a per cent to 7.2 per cent, the lowest since the end of 2008 and down from eight per cent a year ago.
Magna International Inc. (TSX: MG) was an early big loser, as its shares fell $8.37 or 19 per cent to $35.60 after it said recorded net income of $282 million in the second quarter, or $1.15 per share, far below the $1.32 a share that analysts expected. Oil prices turned around following the U.S. jobs report after slumping this week because traders feel that slowing economic conditions would impact demand.
The energy sector fell 2.5 per cent as the September oil contract on the New York Mercantile Exchange lost 61 cents to US$86.02 after plunging more than $5 Thursday. Suncor Energy (TSX:SU) declined $1.02 to C$32.10 and Canadian Natural Resources (TSX:CNQ) was down 79 cents to $39.40.
The mining sector lost 2.43 per cent as the September copper contract lost five cents to US$4.18 a pound. Teck Resources (TSX:TCK.B) lost 82 cents to $42.08.
Traders looking for safety pushed the December gold contract up $1.90 to US$1,650.90 an ounce, leaving the gold index slightly lower. Barrick Gold Corp. (TSX:ABX) rose 19 cents to $45.57.
Financials were also a drag with Royal Bank (TSX:RY) down 48 cents to $50.25.
New York markets were weak with the Dow Jones industrial average down 0.83 of a point to 11,382.85 following a 513-point tumble on Thursday.
The Nasdaq composite index lost 21.2 points to 2,535.19 while the S&P 500 index declined 3.27 points to 1,196.8.
In earnings news, shares in Telus Corp. (TSX:T), Canada’s second biggest telecom operator, were off 87 cents to $50.41 after it raised its revenue guidance and boosted its dividend Friday. It also reported net profits in the second quarter rose to $324 million or 99 cents a share from $302 million or 94 cents a year ago.
Enbridge Inc. (TSX:ENB), a major oil pipeline operator and natural gas distributor, reports its net earnings in the second quarter nearly doubled to $259 million or 35 cents a share. Its shares dipped 16 cents to $30.03.
Investors continued to selloff on foreign markets Friday as Japan's Nikkei 225 stock average slid 3.7 per cent, Hong Kong's Hang Seng dived 4.3 per cent while China's Shanghai Composite Index lost 2.2 per cent.
European bourses were mainly lower as leaders face the prospect that Italy and Spain won't be able to hold out until a new, strengthened bailout fund is in place to prop them up.
Italian and Spanish bonds traded at levels that threaten those countries ability to raise money in the bond markets to pay off debts.
However, losses were pared following the U.S. jobs data and London's FTSE 100 index dropped 0.88 per cent, Frankfurt's DAX lost 0.57 per cent while the Paris CAC 40 was up 1.57 per cent.