TSX weaker amid solid bank earnings disappointing jobs data

The Toronto stock market appeared set to exit May trading with a modest loss on Thursday despite strong earnings reports from two of Canada’s big banks and major acquisition news from Canada’s tech sector.Buyers were discouraged by a soft jobs report in the United States a day before the release of the key U.S. government non-farm payrolls report for May.As well, a revision to U.S. gross domestic product estimates indicated that American first-quarter growth wasn’t as strong as initially thought.The S&P/TSX composite index declined 41.68 points to 11,391.54 while the TSX Venture Exchange dipped 6.6 points to 1,282.83.Most traders are happy to see an end to this month as worries about the eurozone, worsening economic conditions in the region and slower Chinese economic growth have resulted in sharp losses.The TSX is down well over seven per cent for the month, losing 176 points alone on Wednesday, weighed down particularly by the resource sector as commodity prices have sunk to multi-month lows.Canada’s largest IT services company, Montreal-based CGI Group (TSX:GIB.A), plans to more than double the size of its global workforce and total revenue through a friendly, $3.1-billion deal to acquire U.K. firm Logica PLC. CGI shares surged $2.61 or 12.4 per cent to $23.62.Another sharp drop in commodity prices and weak American data sent the Canadian dollar down 0.6 of a cent to 96.56 cents US.U.S. markets were in the red after payroll processing firm ADP said the U.S. private sector created just 133,000 jobs this month, less than the 150,000 that economists had expected.Meanwhile, economists have been expecting that the U.S. government’s non-farm payrolls report being released Friday will show the American economy cranked out about 140,000 jobs. And the number of Americans filing for jobless insurance last week came in higher than expected — 383,000 versus the 370,000.U.S. economic growth was revised lower for the first quarter to 1.9 per cent from 2.2 per cent.And just after the open, other data showed a deterioration in a widely watched index measuring the health of the manufacturing sector in the U.S. Midwest. The Chicago Purchasing Managers Index came in at 52.7, still showing expansion but down sharply from the April showing of 56.2.The Dow industrials lost 98.24 points to 12,321.62, the Nasdaq composite index fell 34.54 points to 2,802.82 and the S&P 500 index was down 14.04 points at 1,299.28.“You put all that stuff which is showing no growth basically in the U.S. and then you have all the worries, either real or imagined in Europe, and everything keeps playing against you here,” said Fred Ketchen, manager of equity trading at Scotia Capital. “And until we get over this, I guess we’re going to have to put up with it.”The TSX financial sector was up a slight 0.2 per cent after CIBC (TSX:CM) said it earned $811 million of net income in the second quarter, up from $767 million in the comparable period last year. That amounted to $1.90 per diluted share of net income, or $2 per share on an adjusted basis, 12 cents higher than analyst expectations. CIBC’s total revenue was just under $3.1 billion and its shares rose $1.28 to $71.61.National Bank of Canada (TSX:NA) shares added 28 cents to $73.42 as it reported a $553-million profit in the second quarter, up 69 per cent from the same time last year. The bank also announced it was increasing its quarterly dividend to common shareholders by five per cent to 79 cents per share. Excluding special items, National Bank had $347 million of net income in the three months ended April 30, up six per cent from a year earlier.Commodity prices added to Thursday’s losses and the base metals sector fell 2.5 per cent with copper extending Wednesday’s seven-cent slide, down five cents at US$3.35 a pound. Teck Resources (TSX:TCK.B) fell 91 cents to C$30.38 and Ivanhoe Mines (TSX:IVN) lost 55 cents to $9.51.energy sector slid 1.5 per cent with the July crude contract on the New York Mercantile Exchange down $1.49 to US$86.33. It closed Wednesday at its lowest level since October amid worries about the future of the eurozone and the health of the region’s banking sector. Canadian Natural Resources (TSX:CNQ) dropped 75 cents to C$29.10 while Suncor Energy (TSX:SU) gave back 62 cents to $27.53.The gold sector was up 0.3 per cent as bullion edged up 70 cents to US$1,564.10 an ounce. Barrick Gold Corp. (TSX:ABX) improved by 71 cents to C$40.95. Concerns about Europe have lately been focusing on Spain’s banking system, especially after Bankia, the country’s fourth-largest lender, last week announced it needed C19 billion in state aid.Investors are worried that Bankia’s woes might be replicated across Spain’s banking sector, which has suffered badly from the collapse of the construction sector. An economic recession has fuelled concern that the country will become the fourth euro country to be bailed out.Nervous traders have sent the yield on Spain’s 10-year bond to around the 6.5 per cent mark and not far from the seven per cent threshold that is considered to be unsustainable in the long-run.But Greece remains at the centre of worry about the future of the eurozone, particularly after inconclusive elections May 6 saw increased support for parties dead set against the austerity measures that have allowed the country to keep afloat on massive international bailouts. Uncertainty over Greece will rattle markets at least until the next Greek election June 17.European bourses weakened amid the weak U.S. reports as London’s FTSE 100 index was 0.31 per cent lower, Frankfurt’s DAX dipped one per cent and the Paris CAC 40 lost 0.79 per cent.


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