The Toronto stock market closed lower Tuesday amid data showing slower than expected U.S. home price increases and as gold stocks continued to lose their lustre with investors.
The S&P/TSX composite index dropped 122.45 points to 13,349.77, with financials also a major weight as investors nibbled at profits prior to earnings results next week from Canadian banks.
Traders also took in some major dealmaking in the sports business.
The National Hockey League has reached a 12-year, $5.2-billion agreement with Rogers Communications (TSX:RCI.B) for the league’s broadcast and multimedia rights. The league says the deal gives Rogers national rights to all NHL games, including the Stanley Cup Playoffs and Stanley Cup Final, on all of its platforms in all languages.
As part of the deal, CBC will continue to air Hockey Night in Canada and the TVA network in Quebec gets the Canadian French-language multimedia rights. Rogers shares fell 55 cents to $46.23.
The Canadian dollar rose 0.17 of a cent to 94.97 cents US.
U.S. indexes were largely lacklustre while traders also looked to American consumer confidence data.
The Dow Jones industrials inched up 0.26 of a point to 16,072.8. The Nasdaq gained 23.18 points to 4,017.75, its first close above 4,000 since September 2000 and the S&P 500 index was 0.27 of a point higher at 1,802.75.
U.S. home prices rose more slowly in September than in August in a sign that weaker sales were preventing the kind of sharp price gains that occurred earlier this year. The Standard & Poor’s/Case-Shiller 20-city home price index rose 0.7 per cent from August to September, down from a 1.3 per cent gain from July to August.
Other data from the housing sector showed that U.S. housing permits jumped to 1.03 million in October, the fastest pace in five years.
At the same time, concerns about hiring and pay increases in coming months pushed a key gauge of consumer confidence in the economy to the lowest level in seven months in November.
The U.S. Conference Board says that its index of consumer confidence dropped to 70.4 from 72.4 in October.
Investors also continued to digest Iran’s deal with six world powers on nuclear development reached over the weekend.
Markets had a tepid response to the deal Monday. Oil prices initially fell sharply even though the agreement did not loosen sanctions on Iran’s oil exports, but by the end of the session it was down only 75 cents a barrel.
On Tuesday, the January contract on the New York Mercantile Exchange edged 41 cents lower to US$93.97 a barrel. The energy sector shed 0.77 per cent and Imperial Oil (TSX:IMO) was down 73 cents to C$44.99 and Suncor Energy (TSX:SU) dropped 65 cents to $36.59.
The gold sector fell about 2.5 per cent while December bullion gained 20 cents to US$1,241.40 an ounce. The sector has registered steep declines in 2013, down almost 50 per cent year to date as gold prices have also fallen amid speculation that the U.S. Federal Reserve is set to taper its monthly US$85 billion of bond purchases, which have kept rates low and supported a stock market rally. Also, inflation is very low in many parts of the world.
“They’ve been beaten up and some of them (gold miners) have been depleting cash on their balance sheets as they go through capital expenditures while the commodity prices fall,” said Kash Pashootan, vice-president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
“You get to a point where the next natural step in the cycle is for consolidation. We haven’t really seen that yet but it’s going to be consolidation as a means of survival, unless you believe gold will considerably rise, which we don’t.”
Goldcorp (TSX:G) faded 70 cents to C$23.51 and Kinross Gold (TSX:K) gave back 10 cents to $4.87.
December copper was down one cent at US$3.21 a pound and the base metals sector was off 1.55 per cent. Teck Resources (TSX:TCK.B) declined 55 cents to C$25.52.
Financials fell one per cent as TD Bank (TSX:TD) declined $1.14 to $96.71 while Royal Bank (TSX:RY) shed 99 cents to $70.51.
In other corporate developments, international convenience store operator Alimentation Couche-Tard Inc. (TSX:ATD.B) had US$229.8 million of net income in its fiscal second quarter, up 26.8 per cent from a year ago. Ex-items,the Montreal-area company (TSX:ATD.B) had US$249 million of net income or US$1.32 per share, up from 91 cents per share a year earlier and 10 cents ahead of analyst estimates.
Couche-Tard also announced its quarterly dividend will go up about 14 per cent to 10 cents per share on Dec. 19. Its shares were $2.19 higher at $76.17 after earlier hitting an all-time high of $78.
Tuesday’s slide came at a time when the TSX had jumped 8.5 per cent year to date, with most of the gains racked up over just the last two months.
“Given the run that the markets have had, investors are transitioning from having a hunger of seeking opportunities to saying, I feel pretty content . . . let’s see what next year looks like,” Pashootan said.
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