The Toronto stock market headed lower Tuesday, pressured by the falling price of gold and oil amid signs that geo-political tensions may ease after Syria agreed to hand over its chemical weapons.
The S&P/TSX composite index fell 40.20 points to 12,814.44. The Canadian dollar was ahead 0.16 of a cent to 96.56 cents US as the American currency weakened.
Shares in smartphone maker BlackBerry Ltd. (TSX:BB) lost most of the gains it earned on Monday after the Globe and Mail reported today that big pension funds have been reluctant to join Fairfax Financial Holdings Ltd. in a buyout consortium. The company’s stock dropped 5.10 per cent, or 61 cents to $11.35.
Syrian Foreign Minister Walid al-Moallem said early Tuesday his government has accepted Russia’s proposal to dismantle its chemical weapons, in an effort to “uproot U.S. aggression.” Russia’s Foreign Minister Sergey Lavrov said Russia is now working with Syria to prepare a detailed plan, to be presented shortly.
The positive news drove U.S. indexes higher, as the Dow Jones rose 106.11 points to 15,169.23, the Nasdaq was up 21.86 points to 3,728.04 and the broader market measure, the S&P 500, was ahead 11.11 points to 1,682.82.
However, the resource-heavy Toronto market fell, with gold stocks leading the retreat.
In late morning trading, the gold sector was down 3.68 per cent. Nearly all companies in the sector fell, with shares in Barrick Gold (TSX:ABX) down 3.36 per cent, or 67 cents, at $19.25.
December bullion also dropped steeply, coming down $25.20 to $1,361.50 an ounce, while December copper was down two cents to $3.26 and the October crude contract on the New York Mercantile Exchange fell $3.04 to $106.48 a barrel.
It’s the second day of declining crude prices amid somewhat eased tensions surrounding Syria. Although Syria isn’t a major producer, political uncertainty in its region tends to push up crude prices.
“The reduced threat of military action appears to be reducing uncertainty and arguably may also lessen the risk that oil could push higher in the coming months,” said Jane Foley, an analyst at Rabobank International. “This all seems to be translating into a better outlook for global growth which is also supportive of risk appetite.”
Investors have been spooked for the past few weeks as they waited to see if the U.S. would launch military action against the Middle East country for using sarin gas on Aug. 21. The alleged attack in a Damascus suburb reportedly killed 1,429 people.
President Barack Obama cautiously welcomed the developments, but was still scheduled to give a nationally televised address on Syria on Tuesday night.
In corporate news, Toronto-based Centerra Gold Inc. (TSX:CG) has announced a potential resolution of its difficulties with the Kyrgyz government related to its Kumtor gold project. It says it has a non-binding memorandum calling for the state-owned Kyrgyzaltyn JSC to exchange its 32.7 per cent equity interest in Centerra for a 50 per cent interest in a joint venture company that would own the project. Its shares were initially up but reversed direction later Tuesday. They were down 15 cents or 2.3 per cent at $6.32 near midday.
Investors will be watching Apple Inc. for a much-waited announcement. The California company hasn’t disclosed what’s on the agenda for the coming-out party scheduled Tuesday, but it’s rumoured that the company will reveal its latest iPhone model. It had launched the iPhone 5 last September and has never waited longer than a year to update the iPhone, which has generated US$88-billion in revenue during the past year.
Overseas, there was further evidence that China, the world’s No. 2 economy, was over its recent soft patch, which had seen its economic growth moderate. Industrial production was 10.4 per cent higher in August than the year before, ahead of the consensus of analysts’ forecasts of a 9.9 per cent increase.