Resources Stocks Lead TSX Lower -- Canadian Commentary

(RTTNews) - Canadian stocks are lower Tuesday afternoon, with falling commodity prices triggering some strong selling in energy and mining sections.

A report showing a weak reading on Chinese manufacturing activity in August is also weighing on the market. However, some upbeat economic data from the U.S., including a report showing a brisk pace of growth in the manufacturing sector, are limiting the market's downside.

The mood is cautious with investors looking ahead to the European Central Bank's monetary policy, due on Thursday. Markets are expecting the ECB to announce fresh stimulus to boost eurozone economic growth.

Geopolitical worries due to the ongoing conflict in Ukraine and reports that the European Union and the United States are likely to announce fresh sanctions against Russia are also contributing to the weakness in the market.

The benchmark S&P/TSX Composite Index is down 9.96 points or 0.06 percent at 15,615.77, after having declined to 15,574.14 earlier this morning.

On Thursday, the index closed up 67.56 points or 0.43 percent at 15,625.73, after scaling a high of 15,632.58 and a low of 15,516.47 intraday.

The Energy Index is down 1.1 percent. Suncor Energy Inc. (SU.TO), Canadian Natural Resources Limited (CNQ.TO) and Canadian Oil Sands Limited (COS.TO) are declining 1.7 to 2 percent. Cenovus Energy Inc. (CVE.TO), Imperial Oil Limited (IMO.TO), ARC Resources Ltd. (ARX.TO) and Husky Energy Inc. (HSE.TO) are down 0.7 to 1.3 percent, while Talisman Energy Inc. (TLM.TO) is up in positive territory, gaining 0.7 percent.

Pembina Pipeline Corp. (PPL.TO) is up 2.3 percent. The company announced that it will acquire the Vantage pipeline system and Mistral Midstream Inc.'s interest in the Saskatchewan Ethane Extraction Plant for total consideration of $650 million from certain entities affiliated with Riverstone Holdings LLC.

The Diversified Metals Index is lower by 0.7 percent, with Sherritt International Corporation (S.TO), First Quantum Minerals Ltd. (FM.TO), HudBay Minerals Inc. (HBM.TO) and Major Drilling Group International Inc. (MDI.TO) drifting down by 1.5 to 3 percent.

The Capped Materials Index is down 1.3 percent. Barrick Gold Corporation (ABX.TO), Yamana Gold Inc. (YRI.TO) Agnico Eagle Mines Limited (AEM.TO) are losing 2 to 2.5 percent, while Goldcorp Inc. (G.TO) is declining more than 4 percent.

With healthcare stocks faring reasonably well, the Healthcare Index is up 0.87 percent. Valeant Pharmaceuticals International, Inc. (VRX.TO) is gaining over 2.5 percent, while Catamaran Corporation (CCT.TO) and Extendicare Inc. (EXE.TO) are modestly higher.

The Industrial Index is up 0.8 percent, with Canadian National Railway Company (CNR.TO), Canadian Pacific Railway Limited (CP.TO), Finning International Inc. (FTT.TO), Progressive Waste Solutions Ltd. (BIN.TO) and WestJet Airlines Ltd. (WJA.TO) moving up 1 to 2.3 percent.

Ballard Power Systems (BLD.TO) has announced that Randall MacEwen will replace John Sheridan as President and Chief Executive Officer of the company, effective October 6, 2014. The stock is up 0.5 percent.

Financial stocks are mixed. Among big six banks, Toronto-Dominion Bank (TD.TO) and National Bank of Canada (NA.TO) are down 0.5 percent and 0.8 percent, respectively. Bank of Montreal (BMO.TO) and Canadian Imperial Bank of Commerce (CM.TO) are modestly higher, while Bank of Nova Scotia (BNS.TO) and Royal Bank of Canada (RY.TO) are flat.

The Consumer Discretionary Index is up 0.43 percent. Cineplex Inc. (CGX.TO) is adding 1.2 percent.

Tim Hortons Inc. (THI.TO) is advancing nearly 1.5 percent. According to a regulatory filing by Burger King, Tim Hortons, Inc. (THI.TO) will have to pay C$345 million as termination fee to Burger King Worldwide, Inc. (BKW), it backs out from the $11 billion merger deal.

Stillwater Mining Co. (SWC.U.TO) has announced that Stillwater Canada Inc will scale back activities associated with the Marathon PGM-copper project. The stock is not traded yet this morning.

In commodities, crude oil futures for October are down $1.91 or 1.99 percent at $94.05 a barrel, ahead of weekly inventories data.

Natural gas for October is down $0.151 or 3.63 percent at $3.914 per million btu.

Gold futures for December are down $21.80 or 1.69 percent at $1,265.60 an ounce.

Silver for December is down $0.289 or 1.49 percent at $19.203 an ounce. Meanwhile, copper is up $0.012 pr 0.39 percent at $3.173 per pound.

In economic news from the U.S., a report from the Institute for Supply Management showed activity in the manufacturing sector to have unexpectedly grown at a brisk pace in August. The ISM said its purchasing managers index climbed to 59.0 in August from 57.1 in July. Economists expected the index to edge down to 56.8.

Meanwhile, data from the Commerce Department showed construction spending to have rebounded by a more than expected 1.8 percent to an annual rate of $981.3 billion in July after falling by 0.9 percent to a revised $963.7 billion in June.

In economic news from the eurozone, prices of goods from euro zone factories resumed their decline in July, putting further pressure on the European Central Bank to announce monetary stimulus at this week's meeting.

Producer prices fell 0.1% from June, and were down 1.1% from July 2014, according to the European Union's statistics.

During the week, traders will be looking ahead to a slew of economic reports including the U.S. non-farm payrolls data for August. The private sector employment report from ADP and weekly jobless claims data are also awaited.