TSX Ends Lower As GDP Shrinks -- Canadian Commentary

(RTTNews) - TSX Ends Lower As GDP Shrinks -- Canadian Commentary

Canadian stocks ended sharply lower for a second straight session on Friday, tracking declining global equity markets even as some weak Canadian gross domestic product data and disappointing U.S. GDP report weighed on investor sentiment.

The decline was led largely by heavy weight mining and financial stocks, with the energy sector making up for some of the losses.

Data from Statistics Canada showed the economy contracted a seasonally adjusted 0.6 percent on an annualized basis in the first quarter, compared to a 0.3 percent growth expected by economists. The fourth quarter economic growth was revised down to 2.2 percent from the earlier 2.4 percent.

Canada's gross domestic product decreased 0.1 percent on quarter in the first quarter, following a growth of 0.6 percent in the fourth quarter of 2014. This was the first negative growth rate of real GDP since the second quarter of 2011.

Markets in the United States are also under pressure and ended in the red, following the release of a trio of weak economic reports. The U.S GDP report was revised to show a contraction in the first quarter. Nevertheless, the revised decline in first-quarter GDP was still slightly smaller than what economists expected. The Chicago PMI and U.S. consumer sentiment report also disappointed investors.

Markets in Europe ended largely in the red Friday, as worries over Greece persisted. Greece's creditors have reportedly demanded the debt-laden country to make hard commitments and overhaul its finances in order to seal an agreement by June 5, when the next payment to the IMF becomes due.

IMF Managing Director Christine Lagarde said on Thursday that Greece's exit from the Eurozone is a possibility, but it would probably not be an end to the euro.

The benchmark S&P/TSX Composite Index closed Friday at 15,014.09, down 92.91 points or 0.62 percent. The index scaled an intraday high of 15,118.57 and a low of 14,956.00.

On Thursday, the index closed down 3.47 points or 0.02 percent, at 15,107.00, having scaled an intraday high of 15,161.29 and a low of 15,005.03.

Gold futures ended higher after some disappointing economic data from the U.S. with first quarter gross domestic product revised downward, and some soft Chicago PMI and U.S. consumer sentiment reports.

The Gold Index shed 0.35 percent, although gold for August delivery gained $1.00 or 0.1 percent to settle at $1,189.80 an ounce on the New York Mercantile Exchange Friday.

Among gold stocks, Goldcorp Inc. (G.TO) dropped 0.23 percent, Barrick Gold Corp. (ABX.TO) fell 1.34 percent, and Eldorado Gold Corp. (ELD.TO) slipped 0.17 percent.

The Capped Materials Index dropped 0.86 percent, with Agrium Inc. (AGU.TO) falling 1.35 percent. Agnico Eagle Mines Limited (AEM.TO) added 0.28 percent, while Franco-Nevada Corp. (FNV.TO) slipped 0.73 percent.

Potash Corp. of Saskatchewan Inc. (POT.TO) dropped 2.69 percent. TD Bank downgraded its rating on the stock to "Hold" from "Buy."

Crude oil futures surged to end higher for second straight session on Friday, after U.S. stockpiles declined more than expected last week with a drop in the active drilling rig count in the U.S.

A weekly report from the U.S. Energy Information Administration said U.S. crude oil inventories dropped 2.8 million barrels in the week ended May 22, while analysts expected a decline of 1.8 million barrels. This is the fourth straight week of decline for crude oil inventories.

The Energy Index gained 0.60 percent, with U.S. crude oil futures for July delivery, the most actively traded contract, soaring $2.62 or 4.5 percent, to settle at $60.30 a barrel on the New York Mercantile Exchange Friday.

Among energy stocks, Suncor Energy Inc. (SU.TO) fell 0.41 percent, while Crescent Point Energy Corp. (CPG.TO) moved up 0.36 percent. Encana Corp. (ECA.TO) added 0.90 percent, and Canadian Natural Resources Limited (CNQ.TO) gained 0.37 percent.

Canadian Oil Sands Limited (COS.TO) added 1.87 percent, while Pacific Rubiales Energy Corp. (PRE.TO) moved up 1.69 percent.

The Diversified Metals & Mining Index dropped 1.41 percent, as First Quantum Minerals Ltd. (FM.TO) shed 0.61 percent, Lundin Mining Corp. (LUN.TO) fell 0.86 percent, and Sherritt International Corp. (S.TO) gathered 2.89 percent. Teck Resources (TCK.B.TO) dived 4.11 percent.

The heavyweight Financial Index fell 0.88 percent, as National Bank of Canada (NA.TO) dipped 1.52 percent, and Bank of Montreal (BMO.TO) fell 1.53 percent.

Bank of Nova Scotia (BNS.TO) jumped 1.29 percent, after reporting second quarter adjusted earnings of C$1.43 per share, compared to C$1.40 per share last year. Analysts expected earnings of C$1.39 for the quarter.

Toronto-Dominion Bank (TD.TO) fell 2.20 percent, Royal Bank of Canada (RY.TO) declined 1.15 percent, and Canadian Imperial Bank of Commerce (CM.TO) fell 0.76 percent,

The Capped Health Care Index shed 0.44 percent as Valeant Pharmaceuticals International, Inc. (VRX.TO) dropped 1.34 percent. Concordia Healthcare Corp. (CXR.TO) added 0.64 percent, and Catamaran Corp. (CCT.TO) fell 0.51 percent.

The Capped Industrials Index dropped 0.43 percent, as Finning International Inc. (FTT.TO) shed 0.28 percent. Canadian Pacific Railway Limited (CP.TO) fell 1.86 percent, CAE Inc. (CAE.TO) shed 0.80 percent, and Canadian National Railway (CNR.TO) dropped 0.24 percent.

Nevertheless, Air Canada (AC.TO) gained 1.18 percent and Bombardier Inc. (BBD-A.TO) moved up 0.78 percent.

The Information Technology Index shed 0.56 percent, as BlackBerry Inc. (BB.TO) dropped 2.09 percent, Constellation Software Inc. (CSU.TO) fell 1.35 percent, and Sierra Wireless, Inc. (SW.TO) jumped 3.32 percent. Descartes Systems Group Inc. (DSG.TO) added 0.37 percent.

Merus Labs International (MSL.TO) is up 4.68 percent, after TD Bank initiated coverage on the stock with a "Buy" rating.

The Capped Telecommunication Index slipped 0.26 percent, as Rogers Communications Inc. (RCI.B.TO) fell 1.07 percent, TELUS Corp. (T.TO) dropped 0.47 percent, and BCE Inc. (BCE.TO) surrendered 0.31 percent.

On the economic front, Canada's economy contracted between January and March, with gross domestic product dropping at a 0.6 percent annualized pace, Statistics Canada said Friday. It was the first contraction in four years. Economists expected the economy to expand 0.3 percent in the first quarter.

Canada's fourth-quarter growth estimate was revised to 2.2 percent from the 2.4 percent previously.

Elsewhere, economic activity in the U.S. contracted for the first time in a year in the first quarter of 2015, revised data from the Commerce Department showed Friday. The U.S. gross domestic product fell by 0.7 percent in the first quarter compared to the previously reported 0.2 percent uptick. The drop came on the heels of a 2.2 percent increase in the fourth quarter. The revised decrease in first-quarter GDP was still slightly smaller than the 0.8 percent drop expected by economists.

Business activity in the Chicago area unexpectedly contracted in May, a report from MNI Indicators showed Friday. The Chicago business barometer tumbled to 46.2 in May from 52.3 in April, with a reading below 50 indicating a contraction in regional business activity. Economists expected the index to edge up to a reading of 53.1.

Consumer sentiment in the U.S. deteriorated less than previously estimated in May, a report from the University of Michigan revealed Friday. The consumer sentiment index for May was upwardly revised to 90.7 from the previously reported 88.6, although it remained below the April reading of 95.9.

Germany's retail sales increased at a faster-than-expected pace in April, after declining in the previous two months, preliminary figures from the statistical office Destatis showed Friday. Retail sales climbed a seasonally and calendar-adjusted 1.7 percent month-over-month in April, in contrast to a 1.4 percent decline in March. Economists expected a 1.0 percent climb for the month. It was the first increase in three months.

France's household consumption grew less-than-expected in April after a slump in March, amid weaker spending on durables, figures from the statistical office INSEE showed Friday. Household consumption edged up 0.1 percent from March, when it declined 0.7 percent, which was the biggest fall since January 2014. Economists had forecast 0.4 percent growth.

France's producer prices continued to decline in April, figures from the statistical office INSEE showed Friday. Producer prices for French market dropped 2.0 percent year-on-year in April, slightly slower than the 2.2 percent decrease in March.

An index measuring consumer confidence in the United Kingdom decreased in May, after a 12-year high in the previous month, as all five measures contributed negatively to the index, a survey from GfK showed Friday. The index fell 3 points to +1 from +4. Economists expected the index to remain at +4.