Canadian Stocks Are Losing Ground As Gold Weakens -- Canadian Commentary

(RTTNews) - The Canadian stock market is under pressure in early trade Tuesday, adding to yesterday's losses. A sharp drop in gold prices is weighing on the overall market this morning. Gold prices have reached their lowest level since the surprise Brexit vote in June.

The continued strength of the U.S. dollar, coupled with yesterday's better than expected U.S. manufacturing report is largely responsible for the weakness in gold. An increased risk appetite among investors is also contributing to the move, as concerns over the European bank sector, particularly Deutsche Bank, continue to relax.

Markets in Europe are trading solidly in positive territory Tuesday, following yesterday's mixed performance. Concerns over Germany's Deutsche Bank continue to ease and British stocks are extending recent gains as the pound has dropped to its lowest level against the dollar in over 30 years.

Markets in the United States were up slightly at the open Tuesday, but have since pared their gains and are hovering near the flat line. Hawkish comments from Richmond Fed President Jeffrey Lacker have had a negative impact on the markets. Lacker stated that he would have voted to raise rates in September.

The benchmark S&P/TSX Composite Index is down 40.76 points or 0.28 percent at 14,648.28.

On Monday, the index closed down 36.82 points or 0.25 percent, at 14,689.04. The index scaled an intraday high of 14,736.84 and a low of 14,642.57.

The Gold Index is sinking 5.49 percent. Gold prices have accelerated lower Tuesday morning and have dropped to their lowest level since June.

Kinross Gold (K.TO) is losing 6.59 percent and Barrick Gold (ABX.TO) is declining 4.87 percent. Eldorado Gold (ELD.TO) is down 5.24 percent and IAMGOLD (IMG.TO) is decreasing 7.20 percent. Yamana Gold (YRI.TO) is surrendering 8.17 percent and Goldcorp (G.TO) is falling 5.13 percent. B2Gold (BTO.TO) is also weakening by 7.02 percent.

The Capped Materials Index is also down 3.94 percent. Agnico Eagle Mines (AEM.TO) is falling 6.81 percent and Franco-Nevada (FNV.TO) is declining 3.69 percent. Silver Wheaton (SLW.TO) is losing 5.43 percent.

The Capped Healthcare Index is lower by 0.09 percent. Extendicare (EXE.TO) is falling 0.11 percent and Concordia Healthcare (CXR.TO) is dropping 5.46 percent.

The Capped Information Technology Index is climbing 0.81 percent. Sierra Wireless (SW.TO) is advancing 0.77 percent and Constellation Software (CSU.TO) is rising 0.86 percent. Descartes Systems Group (DSG.TO) is up 1.25 percent.

The Capped Industrials Index is gaining 0.41 percent. Canadian National Railway (CNR.TO) is higher by 0.94 percent and Canadian Pacific Railway (CP.TO) is increasing 0.60 percent. Air Canada (AC.TO) is advancing 0.98 percent.

AutoCanada (ACQ.TO) is rising 0.45 percent, after it announced the acquisition of Wellington Motors.

The Energy Index is up 0.35 percent. Crude oil prices failed to hold $50 a barrel Tuesday morning, as Iran signed a deal to develop oil fields and boost production.

Cenovus Energy (CVE.TO) is gaining 1.01 percent and Suncor Energy (SU.TO) is increasing 0.74 percent. Husky Energy (HSE.TO) is higher by 0.62 percent and Imperial Oil (IMO.TO) is up 1.38 percent. Crescent Point Energy (CPG.TO) is climbing 1.65 percent and Canadian Natural Resources (CNQ.TO) is adding 0.47 percent.

The Capped Telecommunication Services Index is up 0.14 percent. BCE (BCE.TO) is rising 0.07 percent and Rogers Communication (RCI-B.TO) is increasing 0.61 percent.

The heavyweight Financial Index is increasing 0.07 percent. Royal Bank of Canada (RY.TO) is up 0.14 percent and Toronto Dominion Bank (TD.TO) is rising 0.34 percent. Bank of Nova Scotia (BNS.TO) is advancing 0.53 percent.

Bank of Montreal (BMO.TO) is lower by 1.67 percent after it amended its regulatory capital ratios.

Penn West Petroleum Ltd. (PWT.TO) announced Tuesday that David French will be joining the company as President and Chief Executive Officer. Shares are rising 0.82 percent.

SNC-Lavalin (SNC.TO) has been awarded a contract to design and supervise numerous activities related to Bahrain's electricity infrastructure. The stock is now up 0.69 percent.

On the economic front, Eurozone producer prices decreased at a faster-than-expected pace in August, after rising in the previous three months, figures from Eurostat showed Tuesday.

Industrial producer prices fell 0.2 percent month-over-month in August, reversing a 0.3 percent climb in July, which was revised from a 0.1 percent increase reported earlier. That was just above the 0.1 percent drop expected by economists.

The U.K. construction sector expanded for the first time since May largely due to a recovery in residential building, data from Markit showed Tuesday. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose unexpectedly to 52.3 in September from 49.2 in August. The score was expected to fall to 49.

In commodities, crude oil futures for November delivery are up 0.06 or 0.12 percent at $48.87 a barrel.

Natural gas for November is down 0.039 or 1.33 percent at $2.884 per million btu.

Gold futures for December are down $26.40 or 2.01 percent at $1,286.30 an ounce.

Silver for December is down $0.518 or 2.75 percent at $18.35 an ounce.