The Toronto stock market is lower Tuesday amid news that the board at Botox-maker Allergan has unanimously rejected an improved takeover offer by Quebec-based Valeant Pharmaceuticals.
The S&P/TSX composite index fell 5.76 points to 14,865.45.
The Canadian dollar was almost unchanged, up slightly by 0.02 of a cent to 91.70 cents (U.S.).
Allergan says Valeant’s offer undervalues the California-based company and creates significant risks and uncertainties for its shareholders.
Earlier this month, with the backing of activist shareholder Bill Ackman, Valeant raised its stock-and-cash bid to about $180 (U.S.) per share, valuing Allergan at more than $54-billion.
Allergan repeated its claim that Valeant has an unsustainable business model that relies on “serial” acquisitions and cost reductions, as opposed to revenue growth and operational excellence. Shares in Valeant were up 32 cents, or 0.23 per cent, to $138.35 on the Toronto Stock Exchange.
Meanwhile, Wall Street mostly took back some gains, as the Dow Jones industrials dropped 21.87 to 16,921.23, the Nasdaq gained 0.48 of a point to 4,336.72, while the S&P 500 index dipped 2.48 points to 1,948.79.
Investors are digesting news from China overnight that showed inflation has risen to a five-month high of 2.5 per cent in May, driven by higher food prices.
The Chinese government reported that inflation is still is below the ruling Communist Party’s 3.5 per cent target for the year, leaving room for interest rate cuts or other measures to stimulate the slowing economy if needed. May inflation was up from the previous month’s 1.8 per cent, boosted by a 4.1 per cent rise in food prices.
Chinese economic growth slowed to 7.4 per cent in the three months ended March 31 from the previous quarter’s 7.7 per cent. Other indicators suggest growth might slow still further in the current quarter.
Equities markets have been optimistic in recent sessions as signs indicate that global economies are faring well, or central banks were poised to pump more stimulus to ensure they do.
Last week, the European Central Bank announced that it was going to deal with the threat of deflation and give some lift to a tepid economic recovery in the euro zone by cutting its lending rate to 0.15 per cent from 0.25 per cent and dropping its overnight deposit rate to minus 0.1 per cent from zero.
There’s also been signs of strong first quarter growth in Japan, an improvement in China’s exports and a solid U.S. jobs report for May.
Meanwhile, in Canada, a survey by international human resources firm Manpower Inc. suggests about 20 per cent of Canadian companies expect to add to their payrolls in the third quarter.
But when factoring in seasonal variants, Manpower says that figure falls to 10 per cent. Overall, four per cent of firms that expected to shed workers in the July-September period.
No other Canadian economic releases are scheduled for Tuesday.
Commodities were mostly higher as the July crude contract on the New York Mercantile Exchange was up 24 cents to $104.65 a barrel. August bullion rose $7.30 to $1,261.20 an ounce and July copper was unchanged $3.05 a pound.