TSX Ends Lower As Commodity Prices Fall -- Canadian Commentary

(RTTNews) - Canadian stocks ended lower for a third straight session on Thursday, as commodities tumbling with crude oil prices plunging to over a 6-year low, even as global equity markets slowly recovered from the Chinese move to devalue its currency.

Assistant Governor Zhang Xiaohui of The People's Bank of China at a press conference on Thursday said the Chinese currency has gradually returned to the market level after two days of adjustment and there is no basis for the depreciation to persist.

Deputy Governor Yi Gang said when there is excessive volatility in the market, the bank will act. Gang also dispelled rumors the bank is trying to devalue the currency by 10 percent in order to boost exports as "nonsense."

The market-oriented exchange rate formation mechanism is more conducive to long-term stability, Gang stressed, adding that the flexible exchange rate will increase the central bank's monetary policy independence.

Nevertheless, concerns over China continued to weigh on markets with the yuan skidding over 3 percent since it was devalued by Chinese authorities earlier in the week.

European stocks ended in positive territory, with markets in Germany and France trimming steep weekly losses. Market sentiments improved after China clarified its move on devaluation although it was evident concerns persisted.

U.S. markets showed a lack of direction throughout much of the trading day on Thursday before ending the session little changed. The choppy trading came as traders seemed reluctant to make significant moves following recent volatility. The lackluster performance on Wall Street came on the heels of the release of a slew of U.S. economic data.

U.S. retail sales in July rose in line with estimates, a Commerce Department report revealed Thursday, while business inventories increased much more than expected in June.

Meanwhile, first-time claims for U.S. unemployment benefits increased modestly in the week ended August 8, a report from the Labor Department showed Thursday. A separate report from the Labor Department showed a notable decrease in U.S. import prices in July, largely reflecting a steep drop in fuel prices.

The benchmark S&P/TSX Composite Index closed Thursday at 14,238.40, down 101.13 points or 0.71 percent. The index scaled an intraday high of 14,340.57 and a low of 14,223.62.

On Wednesday, the index dropped 75.14 points or 0.52 percent, to close at 14,339.53. The index scaled an intraday high of 14,359.62 and a low of 14,182.46.

Gold futures ended lower as the dollar trended higher and after Chinese central bank officials defended its move to devalue the yuan spurring some recovery in global equity markets.

The Gold Index slumped 4.70 percent, with gold for August delivery shedding $8.00 or 0.7 percent, to settle at $1,115.60 an ounce on the New York Mercantile Exchange Thursday.

Among gold stocks, Yamana Gold Inc. (YRI.TO) fell 4.32 percent, Kinross Gold Corp. (K.TO) dived 6.12 percent, Barrick Gold Corp. (ABX.TO) fell 3.98 percent, and Eldorado Gold (ELD.TO) surrendered 5.50 percent. Goldcorp Inc. (G.TO) lost 4.50 percent.

The Capped Materials Index fell 2.39 percent, as Agnico Eagle Mines Limited (AEM.TO) dived 5.55 percent and Agrium Inc. (AGU.TO) added 1.78 percent.

Potash Corp of Saskatchewan (POT.TO) gained 0.32 percent after Germany's K+S AG again rejected its 7.9-billion-euro takeover proposal.

Silver Wheaton Corp. (SLW.TO) fell 1.97 percent after reporting a 15 percent drop in profit, hurt by lower commodity prices.

Crude oil futures ended sharply lower at a more than 6-year low, as concerns over China eased with the Chinese central bank providing clarification on the devaluation of yuan and the dollar trending higher after some upbeat economic data from the U.S.

The Energy Index plunged 3.04 percent, with U.S. crude oil futures for September delivery, the most actively traded contract, plummeted $1.07 or 2.5 percent, to settle at $42.23 a barrel on the New York Mercantile Exchange Thursday.

A weekly report from the U.S. Energy Information Administration on Wednesday said U.S. crude oil inventories declined 1.7 million barrels in the week ended August 7, while analysts expected stocks to decline 1.9 million barrels.

Suncor Energy Inc. (SU.TO) fell 1.71 percent, while Encana Corp. (ECA.TO) fell 6.24 percent

Among other energy stocks, Canadian Natural Resources Limited (CNQ.TO) dipped 3.07 percent, Crescent Point Energy Corp. (CPG.TO) fell 1.62 percent, Canadian Oil Sands (COS.TO) plummeted 7.17 percent, and Baytex Energy Corp. (BTE.TO) plunged 10.29 percent.

The Diversified Metals & Mining Index tumbled 3.34 percent, as Teck Resources Limited (TCK-B.TO) surrendered 3.05 percent, Lundin Mining Corp. (LUN.TO) dropped 3.80 percent, and First Quantum Minerals Ltd. (FM.TO) dived 4.12 percent.

The heavyweight Financial Index dropped 0.78 percent, as National Bank of Canada (NA.TO) dropped 0.66 percent, Bank of Montreal (BMO.TO) shed 1.10 percent, and Royal Bank of Canada (RY.TO) surrendered 0.59 percent.

Canadian Imperial Bank of Commerce (CM.TO) fell 0.78 percent, Bank of Nova Scotia (BNS.TO) dropped 1.16 percent, and Toronto-Dominion Bank (TD.TO) dived 1.03 percent.

The Capped Health Care Index added 0.32 percent as Valeant Pharmaceuticals International, Inc. (VRX.TO) gained 1.63 percent, Concordia Healthcare Corp. (CXR.TO) dropped 1.99 percent, and Extendicare Inc. (EXE.TO) gathered 1.95 percent.

The Capped Information Technology Index gathered 0.45 percent, as BlackBerry Limited (BB.TO) fell 1.00 percent, Descartes Systems Group (DSG.TO) added 0.77 percent, and Constellation Software Inc. (CSU.TO) gathered 0.50 percent.

The Capped Telecommunication Index gained 0.84 percent, as Rogers Communication (RCI-B.TO) gained 0.16 percent, TELUS Corp. (TU.TO) added 0.88 percent, BCE Inc. (BCE.TO) moved up 0.19 percent and Manitoba Telecom Services Inc. (MBT.TO) gathered 2.13 percent.

The Capped Industrials Index declined 0.18 percent, as Bombardier (BBD.B.TO) fell 2.67 percent, Finning International Inc. (FTT.TO) dived 4.31 percent, and Air Canada (AC.TO) dipped 0.66 percent.

Canadian Tire Corp.(CTC_A.TO) fell 3.19 percent, after reporting its net income rose 4.1 percent in the second quarter.

Medical Facilities Corp.(DR.TO) gathered 2.95 percent, after the company's revenue for the second quarter improved 3.4 percent from last year.

Onex Corp.(OCX.TO) dipped 0.19 percent, after having posted a net loss in the second quarter compared to a profit last year.

Canadian National Railway Company (CNR.TO) gained 0.82 percent, even as its President and Chief Executive Claude Mongeau revealed taking time off to deal with a health issue.

On the economic front, first-time claims for U.S. unemployment benefits increased modestly in the week ended August 8, a report from the Labor Department showed Thursday. The initial jobless claims edged up to 274,000, an increase of 5,000 from the previous week's revised level of 269,000. Economists expected jobless claims to come in unchanged compared to the 270,000 originally reported for the previous week.

Retail sales in the U.S. rose 0.6 percent in July, while revised data showed that sales were unchanged in June. Sales had been expected to climb by 0.6 percent compared to the 0.3 percent drop originally reported for the previous month.

Separately, a Commerce Department report on Thursday showed business inventories in the U.S. to have climbed 0.8 percent in June after rising 0.3 percent in May. Economists expected another 0.3 percent increase.

A Labor Department report on Thursday showed U.S. import prices in July to have dropped 0.9 percent in July after coming in unchanged in June, largely reflecting a steep drop in fuel prices. Economists expected prices to drop about 1.0 percent.

Policymakers expect Eurozone's economic recovery to broaden further, but to remain moderate and gradual, and risks to the outlook were seen on the downside that included a larger-than-expected adverse impact from the financial developments in China, the minutes of the July rate-setting session of the European Central Bank revealed Thursday.