Canadian Stocks Are Paring Gains After BoC Announcement -- Canadian Commentary

(RTTNews) - The Canadian stock market got off to a positive start Wednesday, but has since pared its gains and briefly slipped into negative territory. Gains in the energy and gold sectors is being counterbalanced by losses among the industrials and healthcare stocks.

The Bank of Canada announced this morning that it has decided to maintain the benchmark rate unchanged at 0.50 percent. The decision was in line with expectations.

The Bank slashed the GDP growth estimates to 1.1 percent in 2016 and 2 percent in 2017, from previous projections of 1.3 percent and 2.2 percent, respectively.

The estimates for inflation were lowered to 1.5 percent for 2016 and 2.1 percent for 2017, from previous projections of 1.6 percent and 2.1 percent, respectively.

Markets in Europe got off to a weak start Wednesday, but have since manage to inch into positive territory. Investors are in a cautious mood ahead of the European Central Bank policy decision tomorrow.

Markets in the United States are hovering around the flat line Wednesday morning, after recovering from a slight dip at the open. U.S. housing starts unexpectedly tumbled to their lowest level in well over a year in September. Investors are also awaiting the release of the Fed's Beige Book this afternoon. The report may shed additional light on the outlook for monetary policy.

The benchmark S&P/TSX Composite Index is up 13.58 points or 0.09 percent at 14,765.83.

On Tuesday, the index closed up 155.73 points or 1.07 percent, at 14,752.25. The index scaled an intraday high of 14,777.40 and a low of 14,654.23.

The Energy Index is up 0.88 percent. Crude oil prices have risen above $51 a barrel Wednesday morning after Saudi Arabia's oil minister said certain non-OPEC countries will join OPEC and Russia in curbing supplies.

"Non-OPEC is showing willingness to join this effort. And without mentioning names, many countries have said they are willing to not only freeze, but cut at healthy levels that will match whatever is going to happen by OPEC," Khalid Al-Falih said at the Oil and Money Conference in London.

The U.S. EIA also reported this morning that U.S. crude inventories dropped by 5.2 million barrels last week.

Suncor Energy (SU.TO) is increasing 1.24 percent and Canadian Natural Resources (CNQ.TO) is rising 0.42 percent. Crescent Point Energy (CPG.TO) is climbing 1.62 percent and Encana (ECA.TO) is adding 1.54 percent. Husky Energy (HSE.TO) is gaining 0.19 percent and Cenovus Energy (CVE.TO) is advancing 0.54 percent. Imperial Oil (IMO.TO) is also up 0.88 percent.

The Gold Index is rising 0.32 percent. Gold prices have continued to rise Wednesday morning, a day after official data showed U.S. inflation is picking up. Gold is often used as a hedge against inflation.

Barrick Gold (ABX.TO) is advancing 0.47 percent and Kinross Gold (K.TO) is climbing 0.81 percent. Eldorado Gold (ELD.TO) is increasing 2.12 percent and Yamana Gold (YRI.TO) is gaining 0.20 percent. B2Gold (BTO.TO) is increasing 2.58 percent and Goldcorp (G.TO) is rising 1.13 percent.

The Capped Materials Index is also up 0.08 percent. Agnico Eagle Mines (AEM.TO) is rising 1.16 percent and Agrium (AGU.TO) is climbing 0.42 percent. Potash Corp. of Saskatchewan (POT.TO) is adding 0.28 percent.

The heavyweight Financial Index is increasing 0.10 percent. Bank of Nova Scotia (BNS.TO) is advancing 0.16 percent and Canadian Imperial Bank of Commerce (CM.TO) is gaining 0.03 percent. Toronto-Dominion Bank (TD.TO) is climbing 0.12 percent and National Bank of Canada (NA.TO) is rising 0.46 percent and Royal Bank of Canada (RY.TO) is up 0.13 percent and Bank of Montreal (BMO.TO) is higher by 0.29 percent.

The Capped Industrials Index is losing 0.88 percent. Canadian National Railway (CNR.TO) is lower by 0.88 percent and Finning International (FTT.TO) is down 0.55 percent. Air Canada (AC.TO) is dipping 0.08 percent. Canadian Pacific Railway (CP.TO) is falling 2.23 percent. The company reported third quarter adjusted EPS of C$2.73.

The company also said that it has appointed Nadeem Velani as Vice-President and Chief Financial Officer. Velani had been serving as VP and interim CFO since September 9.

The Capped Healthcare Index is lower by 0.49 percent. Concordia Healthcare (CXR.TO) is falling 3.12 percent and Extendicare (EXE.TO) is down 0.42 percent. Valeant Pharmaceuticals International (VRX.TO) is also declining 0.66 percent.

The Capped Telecommunication Services Index is weakening by 0.36 percent. BCE (BCE.TO) is falling 0.40 percent and Rogers Communication (RCI-B.TO) is decreasing 0.81 percent. TELUS (T.TO) is also losing 0.44 percent.

The Capped Information Technology Index is falling 0.11 percent. Sierra Wireless (SW.TO) is losing 0.23 percent and BlackBerry (BB.TO) is surrendering 0.41 percent.

Osisko Mining (OSK.TO) announced that it has ceased to be an insider of BonTerra Resources Inc. The stock is climbing 2.54 percent.

The board of Canexus Corp. (CUS.TO) told its shareholders to reject a takeover offer from Chemtrade Logistics Income Fund. They think it undervalues Canexus. Shares are rising 0.66 percent.

Corus Entertainment (CJR.B.TO) reported earnings adjusted for non-recurring costs came to 5 cents per share. The stock is increasing 4.24 percent.

On the economic front, China's economy grew at a steady pace in the third quarter as domestic factors helped to maintain the momentum, despite subdued global demand.

Gross domestic product expanded 6.7 percent year-on-year in the three months to September, the same pace of growth as seen in the first and second quarters, the National Bureau of Statistics said Wednesday. The annual growth was in line with economists' expectations.

The NBS also reported some key economic indicators for September. Annual growth in industrial production eased unexpectedly to 6.1 percent in September from 6.3 percent in August. Output was expected to increase 6.4 percent.

Meanwhile, retail sales grew at a slightly faster pace of 10.7 percent year-on-year, in line with expectations, after expanding 10.6 percent in August.

Eurozone construction output declined for the first time in five months in August, Eurostat reported Wednesday. Construction output contracted 0.9 percent month-over-month in August, reversing a 1.5 percent gain in the previous month.

The U.K. unemployment rate remained unchanged at a near 11-year low in the three months to August, signaling the resilience of the British labor market to the shock 'Brexit' vote in June. The ILO jobless rate was 4.9 percent, where it has been since the three months to May, data from the Office for National Statistics showed Wednesday. The figure was in line with economists' expectations.

British households' finance outlook worsened in October on higher inflation expectations, while their financial pressures intensified to the strongest level in five months, results of a survey by IHS Markit and financial information provider Ipsos Mori revealed Wednesday.

The seasonally adjusted Household Finance Index, or HFI, dropped to 43.8 in October from 44.7 in September.

Suggesting weakness in the housing market, the Commerce Department released a report on Wednesday showing that new residential construction in the U.S. unexpectedly tumbled to its lowest level in well over a year in September.

The report said housing starts plunged by 9.0 percent to an annual rate of 1.047 million in September after slumping by 5.6 percent to a revised 1.150 million in August. The continued decline came as a surprise to economists, who had expected housing starts to climb to a rate of 1.180 million from the 1.142 million originally reported for the previous month.

Meanwhile, the Commerce Department also said building permits surged up by 6.3 percent to an annual rate of 1.225 million in September after rising by 0.7 percent to a revised 1.152 million in August. Building permits, an indicator of future housing demand, had been expected to increase to 1.165 million from the 1.139 million that had been reported for the previous month.

In commodities, crude oil futures for November delivery are up 0.79 or 1.57 percent at $51.08 a barrel.

Natural gas for November is down 0.087 or 2.67 percent at $3.176 per million btu.

Gold futures for December are up $5.90 or 0.47 percent at $1,268.80 an ounce.

Silver for December is down $0.058 or 0.33 percent at $17.58 an ounce.