Another record for spot gold did little to boost Canada’s Toronto Stock Exchange (TSX) and TSX Venture (TSX-V) this morning, as investors honed in on the possibility that the US economy’s economic recovery is considerably more fragile than many had expected just a few weeks ago. This morning the US weekly jobless claims showed a drop in claims of just 1,000 to 400,000. Tomorrow morning it will be the US payrolls report – investors appear to be preparing for a weak number.
By 11:30 am, the TSX was down a whopping 408 points, or approximately 3.2% at 12,407 while the more junior company focused TSX-V was off nearly 3% at 1907. The worst performing sectors on the TSX this morning were Heathcare (down 6.4%) and metals & mining (down 6.6%). All of the major sectors fell at least 1%, with decliners outpacing gainers by a ratio of almost 4:1.
Energy and mining stocks were undermined by weaker commodity prices this morning. Crude Oil fell $1.90 to just above $90/barrel, natural gas fell 13 cents to 3.96/mcf and copper slipped 1.7% to $4.26/pound. Gold was, once again, was one of the few investment classes to benefit from the market turmoil. Gold spot hit 1,677 by 11:30 am, up $10/ounce. Silver also climbed 11 cents to $41.87/ounce.
Despite the stronger gold and silver price, large cap producers saw little benefit in their share price. Kinross (TSE:K), Barrick Gold (TSE:ABX) and Pan American Silver (TSE:PAS) fell 2.7%, 2.8% and 5.4% respectively. There were a precious metal stocks moving higher, including Yamana Gold (TSE:YRI) and New Gold (TSE:NG) which both added on less than 1%.
Miners focused on base metals were much harder hit. Coal and Zinc miner Teck (TSE:TCK.B) sank 7%, potash miner Potash Corp (TSE:POT) fell 5.4% and uranium miner Uranium One (TSE:UUU) fell 7.6%. Base metals miner Lundin Mining (TSE:LUN) dropped an eye-watering 13%.
Energy stocks were also hard hit, including oil producer BNK Petroleum (TSE:BKX) which plunged 8.2%. Larger, more diversified energy stocks fared better. Encana (TSE:ECA) fell 2.8%, Suncor (TSE:SU) dropped 4.2%.
The bloodbath was not limited to commodities either. Financials also took a pounding, with all the major banks falling sharply; Toronto-Dominion (TSE:TD) and Royal Bank of Canada (TSE:RY) both fell more than 2%.
In the news
Bell Canada Enterprises Inc (BCE) (TSE:BCE) (NYSE:BCE) announced Thursday a 2.5% drop in its second quarter earnings on the acquisition of CTV, but saw its revenues rise to beat Street estimates, prompting the telecommunications giant to reaffirm its full year outlook.
For the three months ending June 30, BCE posted a net income of $590 million, or $0.76 per share, down from $605 million, or $0.80 per share, a year ago. Adjusted for charges related to BCE's March 2011, $1.3 billion acquisition of CTVglobemedia, earnings on a per share basis were $0.86, up from $0.78 a year ago. Revenues for the company rose to $4.96 billion, an 11.6% hike over $4.44 billion in the same period a year ago, as high revenues at its Bell segment, which includes its wireless and media businesses, were partially offset by lower sales at Bell Aliant.
Analysts had anticipated earnings of 82-cents on $4.94 billion in revenues.
Wi-Lan Inc (TSE:WIN, NASDAQ:WILN) announced Thursday it more than doubled its second quarter revenues, pulling from its year-ago loss, and reaffirming its full year guidance. For the three months ending June 30, the technology licensing company posted net income of $10.3 million, or $0.08 per share, up from a $5.6 million loss, or $0.05 loss per share, a year ago.
Adjusted for certain one-times items, largely related to expenses from the recently resolved litigation with Texas Instruments Inc, net income was $20.8 million, or $0.17 per share, compared to $1.2 million, or $0.01 per share, in the same period last year.
Revenues, which are solely based on royalties from licensing agreements, more than doubled to $27.4 million, compared to $11.6 million in the year-ago period. Royalties from Wi-Lan's top ten licensees only accounted for 79% of total revenues, down from 93% of revenues a year ago, reflecting the new contracts the company has developed.
Analysts had anticipated earnings of $0.17 per share on $27.41 million in revenues.
Canada’s biggest airliner Air Canada (TSE:AC.B) said it narrowed its $46 million net loss in the second-quarter all the while improving its operating income, and reported a rise in July traffic. Air Canada reported a net loss of $46 million, or 17 cents per diluted share, compared to a net loss of $318 million, $1.14 per diluted share, in the year ago period. The latest quarter includes a foreign exchange gain of $9 million, while the net loss last year included a foreign exchange loss of $190 million.
Analysts expected Air Canada to lose 19 cents a share on revenue of $2.9 billion, according to Yahoo Finance.
Clothing maker Gildan Activewear (NYSE:GIL) said profits in the third-quarter jumped 41% helped by higher net selling prices and manufacturing efficiencies, while the company lowers its fourth quarter outlook. Gildan lost $1.19, or 4.11% to $27.73 in recent trade Thursday on the New York Stock Exchange. Revenues climbed 34% to US$529.8 million for the third quarter that ended June 30. That compares with US$395.3 million in the same period last year. Net earnings rose 41% to US$94.1 million, or 77 cents per diluted share that compares to US$64.7 million, or 53 cents per diluted share, one year ago. Gildan attributes growth to higher net selling prices, coupled with manufacturing efficiencies which offset higher cotton and other input costs and lower unit sales volumes.
Analysts, on average, had expected Gilden to earn 71 cents, on revenues of $549 million, according to Bloomberg Businessweek.