The Toronto stock market was little changed and U.S. indices dipped Tuesday amid weaker commodity prices and a reminder to investors to accept the idea of the U.S. Federal Reserve putting the brakes on its asset purchase program.
The S&P/TSX composite index added 2.83 points to 13,361.22 while the Canadian dollar was down 0.16 of a cent to 95.28 cents (U.S.).
U.S. indexes were negative with the Dow Jones industrials 1.33 points lower to 15,781.77, the Nasdaq dropped 2.95 points to 3,916.84 while the S&P 500 index was down 2.18 points to 1,769.71.
North American markets racked up solid gains throughout October but they have stalled somewhat amid increasing uncertainty about when the Fed might start tapering its $85-billion of monthly bond purchases, particularly after strong employment and economic growth reports released last week.
But Dallas Federal Reserve President Richard Fisher made it clear Tuesday that that level of asset purchases won’t continue.
“I understand there’s sensitivity, but markets should also bear in mind that this program cannot go on forever,” he told CNBC.
“Our balance sheet has become bloated, and at some point we will have to taper back on the pace of purchases, but that doesn’t mean we’ll stop. We’ll have less accommodation.”
Also, analysts say that U.S. markets could be in for some kind of retracement with the Dow industrials up more than 20 per cent year to date.
Traders also looked ahead to Thursday when the U.S. Senate banking committee will quiz Janet Yellen, President Barack Obama’s candidate to become the next chair of the central bank.
Yellen has a reputation for being a dove as far as stimulus is concerned and traders will be listening for any hints as to whether she thinks the economy is strong enough to start tapering those purchases that have supported a strong rally on many stock markets.
The base metals sector led decliners, down 0.8 per cent while December copper slipped two cents to $3.24 a pound. Turquoise Hill Resources lost 14 cents to C$4.73.
The gold sector was down 0.3 per cent as December bullion pulled back $1.20 to $1,279.90 an ounce. Franco Nevada shed 45 cents to $46.18.
The consumer staples sector was also off about 0.3 per cent.
Shoppers Drug Mart Corp. says its third-quarter net profit was $166-million, down from $168-million a year earlier as it included pre-tax expenses related to a friendly takeover by Loblaw Co. Ex-items, earnings per share were 88 cents, up from 85 Canadian cents a year earlier and seven cents better than analysts expected. Its shares dipped six cents to $60.66.
Investors will also take in other earnings from big retailers this week including home improvement chain Rona Tuesday and grocers Metro and Loblaw on Wednesday.
December crude on the New York Mercantile Exchange declined 57 cents to US$94.57 a barrel and the energy sector lost 0.3 per cent.
Meanwhile, the International Energy Agency said that the United States is moving toward “meeting all of its energy needs from domestic resources by 2035.”
The IEA also said in its World Energy Outlook that Asia will be the clear centre of the global energy trade in the next decade with China already close to becoming the world’s largest oil importer.
In other financial market developments, China’s leaders say state ownership will remain a pillar of the economy. But they have given an unusually strong endorsement to Chinese private businesses, saying they also are “important components” of the economy.
The remarks were contained in a statement issued at the end of a meeting aimed at producing a reform blueprint for the coming decade.
Chinese leaders are under pressure to replace a growth model based on exports and investment that delivered three decades of rapid expansion but has run out of steam. Reform advocates say Beijing should open an array of government-controlled industries to private competition.
Earlier in Asia, Tokyo’s Nikkei jumped 2.2 per cent, South Korea’s Kospi rose 0.9 per cent, and China’s Shanghai Composite gained 0.8 per cent.
Hong Kong’s Hang Seng shed 0.2 per cent, Australia’s S&P/ASX 200 edged down 0.1 per cent while stocks in Jakarta fell 1.4 per cent after Indonesia’s central bank announced a surprise interest rate hike.
European bourses were lower as London’s FTSE 100 index, the Paris CAC 40 and Frankfurt’s DAX were all off about 0.2 per cent.