The Toronto stock market declined Tuesday, pressured by falling gold and oil prices amid signs that geopolitical tensions may soon ease after Syria agreed to hand over its chemical weapons stockpile.
The S&P/TSX composite index fell 30.16 points to 12,824.48. A weakening U.S. dollar helped drive the loonie ahead 0.24 of a cent to 96.64 cents US.
The Syrian government said early Tuesday that it has accepted Russia’s proposal to dismantle its chemical weapons as part of an effort to “uproot U.S. aggression.”
President Barack Obama cautiously welcomed the recent developments but said he still plans to ask U.S. Congress to approve airstrikes in case Syria’s promise falls through.
The possible diplomatic breakthrough drove U.S. indexes higher, as the Dow Jones rose 127.94 points to 15,191.06, the Nasdaq was up 22.84 points to 3,729.02 and the broader market measure, the S&P 500, was ahead 12.28 points to 1,683.99.
However, the resource-heavy Toronto market dropped, led by a retreat in gold stocks and declines in commodities. December bullion fell $22.70 to $1,364 an ounce, while December copper took back two cents to $3.26 a pound. The October crude contract fell $2.13 to $107.39 a barrel.
The gold sector on the TSX was down 4.78 per cent. Nearly all companies in the sector fell, with shares in Barrick Gold (TSX:ABX) down 4.32 per cent, or 86 cents, at $19.06 and shares in Alamos Gold (TSX:AGI) down 6.29 per cent, or $1.06, to $15.80.
It’s the second day of declining crude prices amid the easing of tensions surrounding Syria. Although Syria isn’t a major producer, political uncertainty in the oil-rich Mideast tends to push up crude prices.
Investors have been spooked for the past few weeks as they waited to see if the U.S. would launch military action against Syria for allegedly using sarin gas against civilians on Aug. 21. The attack in a Damascus suburb reportedly killed 1,429 people.
“The Canadian market isn’t doing badly when you consider this (easing of the Syrian crisis) is causing some softness in the price of gold bullion and oil prices,” said Norman Raschkowan, a North American strategist with Mackenzie Financial Corp. “Any time that you can avoid getting into an armed conflict, it’s a good thing.”
Raschkowan said some of the strength may be attributed to improved economic data coming out of North America, Europe and China.
Overnight, there was further evidence that China, the world’s No. 2 economy, was over its recent soft patch. Industrial production was 10.4 per cent higher in August than the year before, ahead of analyst forecasts of a 9.9 per cent increase.
“Uncertainty and the anxiety tends to weigh on markets,” he said. “There has been a lot of positive news out there and the general upwards trend that we’ve seen in the last few days is probably more of a reflection on the more encouraging economic data out of China.”
In corporate news, Toronto-based Centerra Gold Inc. (TSX:CG) announced a potential resolution of its difficulties with the Kyrgyz government related to its Kumtor gold project. Its shares were initially up on the news, but later reversed direction and were down 34 cents, or 5.26 per cent, at $6.13.
Meanwhile, shares in smartphone maker BlackBerry Ltd. (TSX:BB) lost most of the gains they picked up Monday after reports surfaced Tuesday that a sale of the company was not as close as some may believe. BlackBerry shares dropped 5.27 per cent, or 63 cents, to $11.33.
Investors in Apple Inc. (Nasdaq: AAPL) seemed unimpressed by the tech giant’s announcement Tuesday of two new iPhone models and a new mobile operating system later this month. Apple says its next mobile operating system, iOS 7, will be available as a free download on Sept 18. Shares in Apple were down $11.53, or 2.28 per cent, to $494.64.