TSX Ends Lower Despite ECB Move -- Canadian Commentary

(RTTNews) - Canadian stocks ended lower on Thursday, with investors refraining from making significant moves despite a surprise rate cut announcement from the European Central Bank. The down-tick was driven largely by material, energy, mining, and healthcare stocks.

Economic data out of the U.S. though positive were slightly below expectations, and though this could prompt the Federal Reserve to hold rates at current levels for an extended period, investors appear not too keen on lapping up stocks.

The European Central Bank today unexpectedly cut interest rates to near zero, reducing the refinancing rate to a record low of 0.5 percent from 0.15 percent. It cut the deposit rate to - 0.2 percent from - 0.10 percent and the marginal lending rate to 0.3 percent from 0.4 percent earlier.

In the post meeting press conference, ECB President Mario Draghi said the central bank will start purchasing asset-backed securities and covered bonds in October.

Data from the U.S. Labor Department showed a slightly bigger than expected increase in jobless claims last week and the ADP's private sector employment data revealed that fewer than expected jobs were added in July.

Investors, besides digesting a slew of economic data, continue to closely watch the situation in Ukraine and the Middle East.

The S&P/TSX Composite Index closed Thursday at 15,576.79 , down 80.84 points or 0.52 percent. The index scaled a intraday high of 15,674.23 and a low of 15,541.88.

On Wednesday, the index closed up 38.55 points or 0.25 percent at 15,657.63, after scaling a intraday high of 15,685.13 and a low of 15,519.08.

Crude oil ended sharply lower on Thursday, after a weekly official oil report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have dropped less than expected last week.

The Energy Information Administration said U.S. crude oil inventories dropped 0.9 million barrels in the week ended August 29, while analysts anticipated a decline of 2.0 million barrels. The EIA report showed U.S. crude oil inventories at 359.6 million barrels, end last week.

The Energy Index dropped 1.26 percent, with U.S. crude oil futures for October delivery declining $1.09 or 1.1 percent to close at $94.45 a barrel Thursday on the Nymex.

Among energy stocks, Cenovus Energy Inc. (CVE.TO) dropped 0.32 percent, Enbridge Inc. (ENB.TO) fell 0.45 percent, Suncor Energy Inc. (SU.TO) slipped 0.07 percent, Encana Corp. (ECA.TO) declined 2.15 percent, and Canadian Natural Resources Limited (CNQ.TO) shed 1.48 percent.

The Financial Index slipped 0.09 percent, with Toronto-Dominion Bank (TD.TO) up 0.10 percent, Canadian Imperial Bank of Commerce (CM.TO) up 0.30 percent, Royal Bank of Canada (RY.TO) dropped 0.10 percent, Bank of Nova Scotia (BNS.TO) down 0.06 percent, National Bank of Canada (NA.TO) gained 0.83 percent, and Bank of Montreal (BMO.TO) shed 0.20 percent.

Gold futures ended lower after a slew of largely encouraging data from the U.S. with the dollar trending sharply higher against a select band of currencies, even as the European Central Bank slashed its benchmark interest rate to a record low.

Global Gold Index plummeted 3.61 percent, with gold for December delivery dropping $3.8 or 0.3 percent to close at $1,266.50 an ounce on the New York Mercantile Exchange Thursday.

Among gold stocks, Goldcorp Inc. (G.TO) dropped 3.02 percent, B2Gold Corp. (BTO.TO) shed 3.41 percent, Yamana Gold Inc. (YRI.TO) dived 3.43 percent, Eldorado Gold Corp. (ELD.TO) declined 4.77 percent, Kinross Gold Corp. (K.TO) dropped 2.64 percent, and Barrick Gold Corp. (ABX.TO) dived 4.24 percent.

The Capped Materials Index dropped 2.23 percent mostly on declining gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) down 1.69 percent.

The Diversified Metals & Mining Index declined 0.74 percent, with First Quantum Minerals Ltd. (FM.TO) dropping 1.45 percent, Lundin Mining Corp. (LUN.TO) slipped 0.51 percent, Sherritt International Corp. (S.TO) up 0.23 percent, and Teck Resources Limited (TCK.B.TO) down 0.53 percent.

The Healthcare Index shed 1.03 percent, after Valeant Pharmaceuticals International Inc. (VRX.TO) dropping 1.47 percent and Catamaran Corporation (CCT.TO) declined 1.00 percent.

Meanwhile, WestJet Airlines Ltd. (WJA.TO) dropped 1.55 percent after reporting a 7.4 percent year-over-year growth in traffic in August 2014, on a 5.7% capacity increase. August load factor was 89.3%, an increase of 1.4 percentage points, compared with 87.9%, in the prior-year period.

In economic news from the U.S., private sector employment rose less than expected with 204,000 jobs in August following a downwardly revised increase of 212,000 jobs in July, data released by ADP showed. Economists expected jobs to rise by about 220,000 in the month.

According to a report from the Labor Department, first-time claims for U.S. unemployment benefits rose slightly more than expected to 302,000 in the week ended August 30, from the previous week's unrevised level of 298,000. Economists anticipated claims to tick up to 300,000 in August.

A Commerce Department report on Thursday showed U.S. trade deficit unexpectedly narrowed in July, reflecting moderate increases in the value of both imports and exports. U.S. trade deficit narrowed to $40.5 billion in July from a revised $40.8 billion in June. Economists expected the deficit to widen to $42.3 billion from the $41.5 billion originally reported for the previous month.

Meanwhile, labor productivity in the U.S. increased by less than previously estimated in the second quarter, rising 2.3 percent. Earlier estimates had pegged productivity growth at 2.5 percent. The report also said unit labor costs edged down by a revised 0.1 percent in the second quarter versus the 0.6 percent increase originally reported.

A report from the Institute for Supply Management showed activity in the U.S. service sector to have unexpectedly expanded at an accelerated rate to 59.6 in August, from 58.7 in the preceding month.

The European Central Bank which cut its key rates today, cut its growth forecast for this year to 0.9 percent from 1 percent predicted in June. The outlook for 2015 was lowered to 1.6 percent from 1.7 percent.

The inflation outlook for 2014 was cut to 0.6 percent from 0.7 percent, while projections for 2015 and 2016 were retained at 1.1 percent and 1.4 percent, respectively.