Canadian Stocks Fall for Fifth Day Amid Gold Price Decline

Strategic Insights -

Canadian stocks declined for a fifth day, driven by losses in gold producers, after the US reported an unexpected drop in consumer prices and the euro strengthened. The Canadian benchmark, S&P/TSX Composite Index, slipped 82.47 points, or 0.7 percent, to 11,682.04 at 10:41 a.m. in Toronto. The decline was led by gold producers, as investors turned to other assets after the US inflation rate fell.

The S&P/TSX has slumped 4.3 percent this month, with concerns over austerity measures in Europe and the continent's debt crisis contributing to the decline. However, the Canadian benchmark has outperformed 20 of 22 other developed markets' primary equity indexes this month, thanks to a rally in gold that has offset some of the losses.

Key Takeaways:

  • Goldcorp Inc., Canada's second-biggest gold producer, dropped 3 percent due to the threat of inflation diminishing.
  • Suncor Energy Inc., Canada's largest oil and gas company, lost 0.8 percent as natural gas decreased after reaching a 10-week high yesterday.
  • Sears Canada Inc., the Canadian unit of the department store chain, rose 7 percent after announcing a special dividend.
  • The S&P/TSX gold stocks dropped as the metal declined as much as 1.8 percent, the most in a month.
  • An index of base-metal and coal producers fell for a fifth day as zinc futures dropped from a seven-month low and copper declined.
  • Energy companies slipped as natural gas futures fell 1.8 percent on concerns the fuel's 11 percent gain this month through yesterday was overdone.

Statistics:

  • The S&P/TSX Composite Index slipped 82.47 points, or 0.7 percent, to 11,682.04 at 10:41 a.m. in Toronto.
  • The gold price surged 11 percent this year through yesterday as investors sought an alternative to holding euros.
  • The European currency rose against all other major currencies, including a 1.3 percent gain against the US dollar.
  • The US consumer price index fell 0.1 percent in April, the first decline in 13 months.
  • Gold declined as much as 1.8 percent, the most in a month.

Sources:

  • Reuters News
  • Bloomberg News
  • Labour Department, Washington
  • Royal Bank of Canada
  • Euclid Infotech Pvt. Ltd.