By Sarah Pringle, MarketWatch
SAN FRANCISCO (MarketWatch) – Canadian stocks ended a five day rally Friday amid the release of June inflation and consumer price index data, as wariness surrounding the Euro zone resurfaced.
“U.S. stocks, crude oil, European stocks, and Canadian [stocks] have consolidated recent gains today, partly due to a pick-up in European stress… as a realization of the fiscal difficulties facing Spain filtered through the market,” said Fergal Smith, market strategist at ActionEconomics.
The S&P/TSX benchmark index /zigman2/quotes/210598478/delayed CA:GSPTSE +0.28% fell 42.79 points, or 0.37%, to settle at 11,622.91, as a 2% slide by metals and mining stocks and 1.5% decline in the information technology sector XX:TORGC194 +0.97% led percentage decliners.
Dow drops 120 on Spain worries
Stocks drop for the first time in four days, as worry about Spain's mounting debt rattled markets and overshadowed a raft of better-than-forecast corporate earnings reports.
Retreats in Canada lagged those seen on Wall Street, where the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.24% and Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.13% saw even greater losses, but still managed to remain positive on the week. Canada’s benchmark equities index also held on, lifting almost 1% since Monday.
“More broadly the market has been able to grind higher partly because of earnings releases, better than had been feared. That, and increased momentum toward quantitative easing in the U.S.,” said Smith.
Among the weakest metal miners were copper and gold producer Thompson Creek Metals shaving off 3.8%, and Ivanhoe Mines /zigman2/quotes/207656050/delayed CA:IVN 0.00% losing 5.6%.
Energy share declines fell in line with losses seen among the commodity future, as crude for August delivery /zigman2/quotes/209725749/delayed CLQ22 +0.52% ended $1.22 lower to finish the session at $91.44 on the New York Mercantile Exchange. Read more about oil.
Meanwhile, gold for August delivery inched upward $2.40 to $1,582.8 an ounce on the New York Mercantile Exchange. Likewise, Canada’s materials sector /zigman2/quotes/210598474/delayed XX:TORGC195 -0.35% , consisting of several gold mining companies, avoid losses, edging 0.03% higher. Read more about gold.
Shares of West Fraser Timber Co. /zigman2/quotes/202351311/delayed CA:WFT -0.51% jumped 5% Friday, after the wood product producer posted late Thursday a second quarter profit of C$26.9 million, up from C$10.3 million, a year ago.
Economically speaking, the consumer price index for June fell 0.2%, following a 0.3% fall the previous month, according to Statistics Canada. Still, Canadian consumer prices rose 1.5% over the previous 12 months, up from 1.2% in May.
Further, overall inflation in June fell below its 1.7% forecast, climbing 1.6% in the second quarter. A core inflation of 2% matched the Bank of Canada’s estimate, up from 1.8% in May.
Canada’s currency and bonds saw the most relative response to June’s readings, said Smith, although “the data was much tamer than had been anticipated,” he added.
Monthly price declines were observed in clothing, down 3.1%, followed by transportation, slipping 1.8%, as a result of falling gas and auto prices. Lifting inflation higher, the shelter and household operations and furnishings areas rose, propelled by increasing electricity and natural gas prices in June.
“With inflation expectations well anchored and economic growth likely to remain below the economy’s 2% potential rate, we anticipate that inflation will remain subdued for quite some time,” said Capital Economics analysts.
“Accordingly, we think that the Bank of Canada’s tightening bias is misplaced,” they added.
In currency trading, the greenback gained against its Canadian counterpart /zigman2/quotes/210561978/realtime/sampled USDCAD -0.2612% , with one U.S. dollar purchasing C$1.0122 vs. C$1.0076. The loonie has risen about 0.2% so far this week against the U.S. dollar.