TSX Settles Lower, Resource Stocks Weigh -- Canadian Commentary

(RTTNews) - Canadian stocks ended lower on Monday, bucking the trend against rising U.S. equity markets, led by weakness in energy, mining, and financial sectors, with some of the gains capped by increase in gold stock prices.

Markets continue to remain confused after China's shock currency devaluation raised concerns for Canadian exporters, amid speculation the Federal Reserve will delay rate hikes in reaction to the move.

It is feared that China's weak yuan will hurt exports, which may prompt the Fed to keep rates at zero to ensure economic recovery.

Most European stocks ended in positive territory, after some disappointing eurozone gross domestic product data last week.

Meanwhile, German Chancellor Angela Merkel suggested Greece is likely to succeed as the government is taking right steps, while expressing hope the International Monetary Fund will soon join the rescue.

U.S. stocks closed in positive territory, after coming under pressure at the start of trading. Stocks showed a significant rebound over the course of the trading session on Monday, amid the release of a mixed batch of U.S. economic data.

Investors will keep an eye on U.S. economy for clues about whether there is enough momentum to justify a rate hike.

A National Association of Home Builders report on Monday showed modest improvement in homebuilder confidence in August, indicating the single-family housing is making slow but steady progress. The housing market index reached its highest level since hitting a matching reading in November of 2005.

Business activity for New York manufacturers unexpectedly declined in August, a report from the Federal Reserve Bank of New York said Monday, with the index of regional manufacturing activity falling to a six-year low.

The benchmark S&P/TSX Composite Index closed Monday at 14,251.33, down 26.35 points or 0.18 percent. The index scaled an intraday high of 14,267.24 and a low of 14,184.58.

On Friday, the index gained 39.48 points or 0.28 percent, to close at 14,277.88. The index scaled an intraday high of 14,304.38 and a low of 14,224.53.

Gold futures ended higher even as the dollar strengthened amid concerns over China's move to devalue the yuan, and on some mixed economic data from the U.S.

The Gold Index jumped 3.69 percent, with gold for August delivery shedding $5.70 or 0.5 percent, to settle at $1,118.40 an ounce on the New York Mercantile Exchange Monday.

Among gold stocks, Kinross Gold Corp. (K.TO) added 3.88 percent, Barrick Gold Corp. (ABX.TO) moved up 2.28 percent, and Eldorado Gold (ELD.TO) climbed 6.24 percent.

The Capped Materials Index jumped 2.15 percent, mainly on the strength of gold stocks. Potash Corporation of Saskatchewan Inc. (POT.TO) inched up 0.18 percent, and Agrium Inc. (AGU.TO) added 1.07 percent.

Crude oil futures ended lower on renewed supply glut worries, with increasing output from the Middle East and higher rig count in the U.S. suggesting growing domestic production.

The Energy Index shed 1.78 percent, with U.S. crude oil futures for September delivery, the most actively traded contract, falling $0.63 or 1.5 percent, to settle at $41.87 a barrel on the New York Mercantile Exchange Monday.

Suncor Energy Inc. (SU.TO) dropped 1.77 percent, while Encana Corp. (ECA.TO) shed 0.67 percent

The Diversified Metals & Mining Index declined 1.43 percent, as Teck Resources Limited (TCK-B.TO) fell 0.33 percent, and Lundin Mining Corp. (LUN.TO) dropped 2.65 percent.

The heavyweight Financial Index dropped 0.63 percent, as National Bank of Canada (NA.TO) dropped 1.68 percent, Bank of Montreal (BMO.TO) fell 1.03 percent, and Royal Bank of Canada (RY.TO) slipping 0.71 percent.

The Capped Health Care Index added 0.39 percent as Valeant Pharmaceuticals International, Inc. (VRX.TO) gained 1.08 percent.

The Capped Information Technology Index dipped 0.37 percent, as BlackBerry Limited (BB.TO) fell 0.50 percent.

The Capped Telecommunication Index edged down 0.05 percent, as Rogers Communication (RCI-B.TO) dropped 0.57 percent and BCE Inc. (BCE.TO) up 0.39 percent.

The Capped Industrials Index fell 0.65 percent, even as Bombardier (BBD.B.TO) dropped 2.96 percent and Finning International Inc. (FTT.TO) dipped 1.55 percent.

In economic news, the NAHB/Wells Fargo Housing Market Index inched up to 61 in August from 60 in July, in line with economists' estimates. With the modest uptick, the housing market index reached its highest level since hitting a matching reading in November of 2005.

The New York Fed's general business conditions index tumbled to a negative 14.9 in August from a positive 3.9 in July, with a negative reading indicating a contraction in manufacturing activity. Economists expected the index to climb to a positive reading of 4.8.

German economic growth is set to remain strong in the second half of the year, Bundesbank said in its monthly report on Monday. The central bank said consumer spending and foreign demand would support economic activity, even as the economy benefited from the labor market strength.

Germany's factory employment increased in June from the previous year, preliminary figures from Destatis showed Monday. Employment in the manufacturing sector climbed 1.0 percent year-over-year to 5.3 million in June. The number of hours worked grew 8.3 percent to 700 million hours.

Eurozone trade surplus rose to a 6-month high in June as increase in exports exceeded imports growth, a report from Eurostat showed Monday. The trade surplus rose to a seasonally adjusted EUR 21.9 billion in June from EUR 21.3 billion in May. It was the highest level since December 2014, when surplus totaled EUR 22.5 billion. Nonetheless, it was below the expected surplus of EUR 23.1 billion.

German Chancellor Angela Merkel suggested in a television interview on Sunday that the third bailout for Greece is likely to succeed as the government is taking right steps. Merkel also expressed hope the International Monetary Fund will soon join the rescue.

Though the Greek government has made progress in implementing reforms, it remains to be seen if it will continue such performance, Merkel said in an interview to the German broadcaster ZDF.