Canadian stocks ended lower for a second straight session on Thursday, tracking declining global equity markets, under pressure from geopolitical concerns in the Middle East.
Markets have roiled on news that Saudi Arabia and its allies have launched air strikes against the Houthi rebels in Yemen, who reportedly are closing in on critical regions of the country. On Wednesday, President Abdu Rabbu Mansour Hadi fled the southern port city of Aden even as Iranian-backed Houthi militants closed in on several important regions of Yemen.
The news has led to worries about a broader sectarian conflict in the Middle East, as the Saudis consider the Houthi rebels as proxies for Iran.
Crude oil prices surged amid concerns of possible oil shipment disruption from the Middle East, with Yemen a critical transit point for supplies. An estimated 4.0 million barrels of oil pass through Bab el-Mandeb Strait daily and any disruption to the shipping route would likely prevent tankers in the Persian Gulf from reaching the Suez Canal and as well as the SUMED Pipeline. The alternate route would be to go around the tip of Africa.
Both U.S. and Europe markets ended sharply lower Thursday. The plane crash details and the situation in Yemen are weighing on investor sentiment, with some soft economic data from the United States also having an impact.
Black box recordings show that the co-pilot of the Germanwings flight that crashed in the French Alps on Tuesday brought the plane down deliberately. Officials are currently indicating that there are no grounds to consider the crash as a terrorist incident.
After reporting a modest uptick in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department report on Thursday showed initial jobless claims to have pulled back more than expected in the week ended March 21.
The benchmark S&P/TSX Composite Index closed Thursday at 14,869.80, down 59.57 points or 0.40 percent. The index scaled an intraday high of 14,996.74 and a low of 14,848.99.
On Wednesday, the index closed down 151.34 points or 1.00 percent, at 14,929.92. The index scaled an intraday high of 15,161.61 and a low of 14,929.92.
Crude oil ended higher amid concerns of oil shipment disruption from the Middle East after Saudi Arabia launched air strikes on Yemen.
The U.S. Energy Information Administration said crude oil inventories in the country surged 8.2 million barrels in the week ended March 20, while analysts expected an increase of 4.6 million barrels. Total U.S. crude oil inventories were at 466.7 million barrels end last week.
The Energy Index gained 0.39 percent, with U.S. crude oil futures for May delivery, the most actively traded contract, jumping $2.22 or 4.5 percent to settle at $51.43 a barrel on the New York Mercantile Exchange Thursday.
Among energy stocks, Canadian Oil Sands Limited (COS.TO) gained 3.55 percent, Suncor Energy Inc. (SU.TO) moved up 1.08 percent, and Canadian Natural Resources Limited (CNQ.TO) gained 1.56 percent.
Crescent Point Energy Corp. (CPG.TO) added 0.03 percent, while Cenovus Energy Inc. (CVE.TO) shed 1.91 percent.
Encana Corp. (ECA.TO) dropped 0.57 percent, while Pacific Rubiales Energy Corp. (PRE.TO) ended at 3.42 a share.
The Diversified Metals & Mining Index dropped 0.65 percent, as First Quantum Minerals Ltd. (FM.TO) gained 0.60 percent, Lundin Mining Corp. (LUN.TO) shed 0.58 percent, and Teck Resources Limited (TCK-B.TO) fell 3.08 percent.
Sherritt International (S.TO) shed 2.21 percent.
Gold futures ended higher, tracking declining global equity markets with investors seeking the safe haven while staying off the riskier assets, due mainly to increased tensions in the Middle East.
The Gold Index shed 1.89 percent, although gold for April delivery gained $7.80 or 0.7 percent to settle at $1,204.80 an ounce on the New York Mercantile Exchange Thursday.
Among gold stocks, Kinross Gold Corp (K.TO) dropped 3.91 percent, Eldorado Gold Corp. (ELD.TO) fell 3.15 percent, Barrick Gold Corp. (ABX.TO) fell 0.63 percent, and Yamana Gold Inc. (YRI.TO) dived 3.17 percent.
Franco-Nevada Corp. (FNV.TO) dropped 0.29 percent, while Silver Wheaton Corp. (SLW.TO) dipped 2.34 percent. Agnico Eagle Mines Limited (AEM.TO) lost 3.56 percent.
The Capped Materials Index dropped 1.23 percent, as Potash Corp. of Saskatchewan Inc. (POT.TO) gained 0.34 percent and Agrium Inc. (AGU.TO) shed 2.04 percent.
The heavyweight Financial Index dived 0.40 percent, with Bank of Nova Scotia (BNS.TO) down 0.24 percent and Bank of Montreal (BMO.TO) down 0.04 percent.
National Bank of Canada (NA.TO) dipped 1.85 percent, while Toronto-Dominion Bank (TD.TO) fell 0.52 percent. Canadian Imperial Bank of Commerce (CM.TO) dived 0.55 percent, while Royal Bank of Canada (RY.TO) surrendered 0.34 percent.
The Health Care Index gained 0.30 percent, as Valeant Pharmaceuticals International, Inc. (VRX.TO) dropped 0.95 percent, Catamaran Corp. (CCT.TO) fell 0.97 percent, and Extendicare Inc. (EXE.TO) gained 0.27 percent.
The Capped Industrials Index fell 0.22 percent, as Air Canada (AC.TO) dropped 2.58 percent and Bombardier Inc. (BBD.B.TO) shed 1.18 percent.
The Information Technology Index added 0.82 percent, with BlackBerry Limited (BB.TO) shedding 0.09 percent, Sierra Wireless, Inc. (SW.TO) up 0.24 percent, and Descartes Systems Group Inc. (DSG.TO) gaining 1.16 percent.
The Capped Telecommunication Index slipped 0.19 percent, with Rogers Communications Inc. (RCI.B.TO) shedding 0.53 percent, BCE Inc. (BCE.TO) dropping 0.34 percent, and TELUS Corp. (T.TO) gaining 0.26 percent.
Loblaw Companies (L.TO) dipped 1.46 percent, after the company and its affiliates, the owners of the Joe Fresh brand, announced signing of a global license agreement with the ALDO Group.
Microbix Biosystems (MBX.TO) plummeted 10.53 percent, after the Court of Dusseldorf, Germany dismissed its VIRUSMAX patent infringement lawsuit against Novartis Vaccines and Diagnostics without prejudice.
On the economic front, a Labor Department report on Thursday showed initial jobless claims pulled back more than expected in the week ended March 21, after reporting a modest uptick in first-time claims for U.S. unemployment benefits in the previous week. Initial jobless claims fell to 282,000, a drop of 9,000 from the previous week’s unrevised level of 291,000. Economists expected jobless claims to edge down to 290,000.
Elsewhere, German consumer confidence is set to improve further to its highest level in more than 13 years in April, as weak euro and low inflation function as mini stimulus to the economy, survey data from the market research group GfK showed Thursday. The forward-looking consumer sentiment index rose to 10 in April from 9.7 points in March. This was the highest score since October 2001. The index was expected to rise marginally to 9.8.
The French economy grew marginally as initially estimated in the fourth quarter, final data from the statistical office Insee showed Thursday. Gross domestic product rose 0.1 percent sequentially following third quarter’s 0.3 percent increase. The rate came in line with the estimate published on February 13.
French unemployment increased in February following a decline in the prior month, the labor ministry reported late Wednesday. The number of people out of work rose by 12,800 from January to 3.49 million. It increased by 0.4 percent on a monthly basis and 4.6 percent from last year.
The leading Index for France, which measures the future economic activity, increased in January, after remaining unchanged in the previous month, survey figures from Conference Board showed Wednesday. The Conference Board leading economic index rose 0.2 percent in January, after staying flat in December. In November, the index had risen 0.1 percent.
British retail sales continued to expand in February at a faster-than-expected pace, suggesting strong support from domestic spending to economic growth in the first quarter. Retail sales increased at a faster pace of 0.7 percent in February from January, when it gained 0.1 percent, data from the Office for National Statistics revealed Thursday.
The monthly growth exceeded a 0.4 percent rise forecast by economists and marked the fifth straight month of growth.
U.K. retail sales picked up in March after growth nearly halted in February, Distributive Trades survey from the Confederation of British Industry showed Thursday. The retail sales balance rose to 18 percent from 1 percent in February. Nonetheless, it was below expectations of 27 percent.
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