The Toronto stock market was lower Monday ahead of a busy week for economic data that will factor into when the Federal Reserve starts to wind up stimulus that has supported a strong rally on many markets this year.
Contributing to the decline was BlackBerry (TSX:BB) (Nasdaq:BBRY), which plunged after the smartphone maker announced a revised offer from Fairfax.
Fairfax Financial is no longer offering to buy BlackBerry outright. Instead, Fairfax (TSX:FFH) is leading a group that will provide the smartphone company with at least US$1 billion and up to US$1.25 billion of convertible debt.
Once the deal closes, Thorsten Heins will be replaced as BlackBerry CEO on an interim basis by John Chen, who will also be the chairman of the BlackBerry board. BlackBerry shares tumbled $1.01 or 12.48 per cent to $7.08 on the TSX after trading at $6.66, its lowest level in a decade.
“The fact that the share price is so depressed is really again a reflection of the fact there is very little confidence at this point in the story from the market in terms of BlackBerry’s ability to really turn things around in short order,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
“It’s going to be more of a show-me story. BlackBerry is going to have to prove that their new strategy is viable.”
The S&P/TSX composite index lost 15.04 points to 13,322.42 as traders also looked ahead to another heavy week of earnings news from corporate Canada.
The Canadian dollar rose 0.17 of a cent to 96.07 cents US.
U.S. indexes were higher as the Dow Jones industrials declined 23.6 points to 15,591.95, the Nasdaq was up 3.04 points to 3,925.08 and the S&P 500 index added 0.51 of a point to 1,762.15.
The most important data of the week comes out Friday — October employment data for Canada and the U.S.
Economists looked for Canadian job creation to come in at a modest 10,000 with an uptick in the jobless rate from 6.9 per cent to seven per cent.
In the U.S., job creation is expected to come in at only 125,000 for October while the unemployment rate is forecast to rise 0.1 of a point to 7.3 per cent. Analysts say that the numbers will be affected by the partial shutdown of the U.S. government shutdown last month since the data would include private sector workers who were laid off.
On Thursday, the U.S. government will release the first look at third quarter economic growth. Gross domestic product was expected to rise by an annualized rate of 1.9 per cent, down from 2.5 per cent in the second quarter, partly because of the uncertainty caused by brinkmanship in Washington over extending the government’s borrowing limit.
“Without question, the headline number itself will be less critical because it is going to be distorted by the government shutdown to some degree,” added Fehr.
“But I think the broader trend is what the market is going to latch onto.”
On Tuesday, the Institute for Supply Management releases its latest snapshot of the American service sector, which is expected to show slightly slower expansion. The ISM index is expected to come in at 54, down from 54.4 in September.
The communique from last week’s meeting of the Federal Reserve left the impression that the central bank could decide to start winding up its $85 billion in monthly asset purchases as soon as December.
Those bond purchases have kept rate low and is one of the reasons why many stock indexes, including the main U.S. markets, have struck record highs this year.
Meanwhile, investors will take in plenty of earnings reports this week including WestJet (TSX:WJA) and Cineplex Entertainment (TSX:CGX) on Tuesday, pipeline company Enbridge (TSX:ENB) and auto parts giant Magna International (TSX:MGA) on Wednesday. Thursday is the heaviest day for earnings as traders will hear from Tim Hortons (TSX:THI), BCE (TSX:BCE), Canadian Tire (TSX:CTC.A), Canadian Natural Resources (TSX:CNQ) and insurance giants Sun Life Financial (TSX:SLF), Manulife Financial (TSX:MFC) and Great West Lifeco (TSX:GWO).
BlackBerry pushed the TSX tech sector down 1.75 per cent.
Elsewhere, the telecom sector lost 0.6 per cent with Telus (TSX:T) down 46 cents to $36.03.
The financial sector lost 0.4 per cent as Fairfax shares lost almost four per cent to $417.61.
December crude on the New York Mercantile Exchange dipped four cents to US$94.57 a barrel but the energy sector edged 0.3 per cent lower.
Gold stocks led TSX gainers as December bullion moved ahead $5.40 to US$1,318.60 an ounce. The gold index was up 1.6 per cent as Goldcorp Inc. (TSX:G) moved up 40 cents to C$25.74.
The base metals sector was ahead 0.1 per cent while December copper lost four cents to US$3.25 a pound. Lundin Mining (TSX:LUN) rose 10 cents to C$4.71.