By Sarah Pringle, MarketWatch
SAN FRANCISCO (MarketWatch) — Canadian equities finished with losses Wednesday after the Federal Reserve said it would extend its holdings of long-term Treasurys by $267 billion.
Toronto’s benchmark index slumped into negative territory, down 29 points, or 0.25%, to 11,759.34. Weakening mining, energy and tech stocks dragged down the market.
“Cautious policy suggests that the Fed is taking some steps to help the economy, but the situation isn’t so worrisome that it needs to bring out the big guns,” said Emanuella Enenajor, economist at CIBC World Markets.
The continuance of “Operation Twist,” which encompasses the sale of short-term bonds and purchasing of longer-term ones, was exactly what the market expected, said Scott Barclay, financial writer and editor of e-newsletter The Investing Opinion.Read full story on Fed extending ‘Operation Twist’.
“This can only help Canadian equities so closely tied with the U.S. but if the slowdown is protracted or becomes a recession, then all bets are off and resource heavy Canada will take a severe blow,” said Barclay.
The metals and mining sector led decliners, falling 2.6% by session’s end, followed by information technology stocks /zigman2/quotes/210598463/delayed XX:TORGC194 -0.23% , dropping 1.65%. As the top performing sector, telecom services /zigman2/quotes/210598493/delayed XX:TORGC198 -1.20% added 0.87%.
Even as the United States’ largest trading partner, Canada’s reaction Wednesday remained muted, said Enenajor, because an extension of the twist doesn’t have nearly the impact as would further quantitative easing.
“It’s not clear if it’s going to be enough to kick start growth. It’s just markets reacting to the placebo effect of what monetary easing may do to risk assets,” added Enenajor.
Fed extends ‘Twist,’ signals concern
Fed officials signal heightened worries on the economy, extending a program shifting their holdings toward longer-term securities through the end of the year.
Risk assets making notable movements Wednesday included oil and gas producer Candax Energy , dropping 10%, and Capstone Mining /zigman2/quotes/209663346/delayed CA:CS -9.91% sliding 7.1%.
On the upside, NGEx Resources jumped 17% after initial results of a drilling project in Argentina were announced by the company.
“We are very pleased with these results which confirm the potential of Filo del Sol to host very high-grade copper and precious metal mineralization... The company’s 2012 exploration program is shaping up to be the most successful in its history,” stated Wojtek Wodzicki, president and CEO of NGEx.
Nevada Copper /zigman2/quotes/207721511/delayed CA:NCU -5.45% also shot up 13%, following an update on its Pumpkin Hollow copper project in Nevada. The company announced plans to advance the project engineering work by carrying out two separate feasibility studies.
BlackBerry maker Research In Motion suffered losses, down 4.29% Wednesday. The company has reportedly begun laying off a small number of employees.
Gold stocks also dragged down the market, as Kinross Gold /zigman2/quotes/200423011/delayed CA:K -6.07% dropped 2.78%, and NovaGold Resources /zigman2/quotes/202931372/delayed CA:NG -2.84% , fell 2.57%.
Gold futures settled lower, sliding 0.5%, to $1,615.80 an ounce on the Comex division of the New York Mercantile Exchange. Read more about gold.
The greenback made headway on Canada’s currency /zigman2/quotes/210561978/realtime/sampled USDCAD +0.7488% , with one U.S. dollar purchasing C$1.0183 vs. C$1.0179 Tuesday.