TSX Slips Amid Mixed Global Cues - Canadian Commentary

(RTTNews) - Canadian stocks were lingering in the red Wednesday morning amid mixed global cues, with upbeat macroeconomic data out of the Europe overshadowing a weak manufacturing report from China. Preliminary data from Markit Economics showed an indicator of euro zone private sector activity increased more than expected in July.

Asian stocks turned in a mixed performance overnight after a survey showed activity in China's vast manufacturing sector slowed to an 11-month low in July and the Reserve Bank of India announced fresh liquidity-tightening measures to support the falling rupee.

The S&P/TSX Composite Index shed 21.07 points or 0.16 percent to 12,724.31, a day after snapping its four-session winning streak.

Latest data from the EIA revealed that U.S. crude oil inventories dipped 2.80 million barrels and gasoline stocks shed 1.40 million barrels in the weekended July 19. Analysts expected crude oil inventories to dip 2.10 million barrels and gasoline stocks to add 900,000 barrels last week.

The price of crude oil was little changed Wednesday morning following downbeat manufacturing data out of China, the world's second largest energy consumer. China's factory activity fell to the weakest level in eleven months in July amid a continued slide in new orders and faster destocking, preliminary results of a survey by Markit Economics and HSBC revealed. The purchasing managers' index, an indicator of the country's factory sector performance, fell to 47.7 in July from 48.2 in June. An index reading below 50 suggests deterioration in activity.

Crude for September eased $0.32 to $106.91 a barrel.

In the oil patch, Cenovus Energy (CVE.TO) lost about 4 percent/ Suncor Energy (SU.TO), Crescent Point Energy (CPG.TO) and Paramount Resources (POU.TO) were down close to 2 percent each.

Integrated oil company Encana Corp. (ECA.TO) eased 0.50 percent after reporting second-quarter net earnings of $730 million, compared to a loss of $1.48 billion in the year ago quarter. Operating earnings for the quarter rose to $247 million from last year's $198 million, with Operating earnings per share improving to $0.34 from $0.27 in the prior year. Analysts expected the company to report earnings of $0.17 per share for the quarter.

The price of gold was flat Wednesday morning, with the euro trading firm versus a basket of currencies after an indicator of euro zone private sector activity increased more than expected. Gold for August delivery edged down $0.50 to $1,334.20 an ounce.

Among gold stocks, Agnico-Eagle Mines (AEM.TO) was down nearly 5 percent. Royal Gold (RGL.TO0 and Goldcorp. (G.TO) lost over 2 percent each.

Gold miner Barrick Gold (ABX.TO) shed about 3 percent after announcing that it would divest Barrick Energy Inc., as part of its portfolio optimization strategy for about C$455 million.

Financial technology solutions provider Davis + Henderson Corp. (DH.TO) slipped about 1.50 percent after it said that it has agreed to buy U.S.-based rival Harland Financial Solutions from parent company Harland Clarke Holdings Corp. for about $1.2 billion in cash.

Railroad operator Canadian Pacific Railway (CP.TO) surrendered over 2 percent after posting significantly higher second quarter net income of C$252 million or C$1.43 per share versus C$103 million or C$0.60 per share a year ago. Analysts expected earnings per share of C$1.49 for the quarter.

Meanwhile, food retailer and financial services provider Loblaw Companies (L.TO) gained over 2 percent after reporting improved second quarter net earnings of C$178 million or C$0.63 per share compared with C$156 million or C$0.55 per share during the same quarter last year. Analysts expected earnings per share of C$0.58 for the quarter.

Pharmaceutical company Transition Therapeutics Inc. (TTH.TO) jumped nearly 20 percent after announcing the exclusive licensing of worldwide rights to develop and potentially commercialize novel small molecule transcriptional regulator TT-601 from Eli Lilly and Co. (LLY) for the treatment of osteoarthritis pain.

In economic news from the U.S., the Commerce Department said new home sales surged up by 8.3 percent to an annual rate of 497,000 in June from the revised May rate of 459,000. Economists had expected new home sales to climb to an annual rate of 481,000 from the 476,000 originally reported for the previous month.

Elsewhere, an indicator of euro zone private sector activity increased more than expected in July, a preliminary report from Markit Economics showed. The flash composite output index, that measures business activity in both manufacturing and services sectors, rose to an 18-month high of 50.4 in July from 48.7 in June. Economists had forecast the index to rise to 49.1.

German private sector business activity rose at the fastest pace in five months in July, preliminary results of a survey by Markit Economics showed. The composite output index, that measures performance of both manufacturing and services, rose to a five-month high of 52.8 in July from 50.4 in June. Readings above 50 indicates expansion in activity.