Canada stocks drop ahead of US Federal Reserve decision
Wednesday 18 September 2013
Canada's main stock index was slightly lower on Wednesday, with investors unwilling to make big bets ahead of a US Federal Reserve announcement later in the day on whether it will start scaling back its stimulus program.
Gold miners were among the heaviest weights as the price of gold fell, while major banks also fell. BlackBerry Ltd jumped after launching a new smartphone, but later pared gains.
"Everyone is waiting for the Fed," said John Kinsey, a portfolio manager at Caldwell Securities. "I don't really expect anything to happen before they make their announcement."
The US central bank was expected to take its first tentative steps to wean the global economy off super-easy money by cutting down on its $85 billion in monthly asset purchases. It was set to announce its plans at 2pm EDT (1800 GMT).
Kinsey said commodity stocks, which make up roughly 38 percent of the Toronto stock market's benchmark index, could take a hit if the Fed reduces its purchases significantly more than investors expect.
"The commodities are the ones that are more economically sensitive, so they would probably be the ones that would suffer the most if they got very aggressive," he said.
The Toronto Stock Exchange's S&P/TSX composite index
was down 32.60 points, or 0.25 percent, at 12,801.51 at midmorning. Seven of the index's 10 main sectors were trading in the red.
Among banks, Toronto-Dominion Bank fell 0.5 percent to C$90.97, and Royal Bank of Canada slipped 0.2 percent to C$66.19.
Among gold miners, Goldcorp Inc fell 1.4 percent to C$26.72, Eldorado Gold Corp was off 2.1 percent at C$7.31, and Barrick Gold Corp was down 0.5 percent at C$18.78.
The price of bullion fell to a six-week low.
Smartphone maker BlackBerry jumped more than 2 percent at the open after launching a new flagship smartphone, but fell back to trade up 0.6 percent at C$10.94.
China's top offshore oil explorer, CNOOC Ltd, made its long-awaited debut on the Toronto Stock Exchange on Wednesday, under the symbol "CNU".
CNOOC last year promised to cross-list its shares in Canada, as part of undertakings made to the Canadian government to win approval of its $15.1 billion acquisition of Canadian oil and gas company Nexen Inc.
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