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Bay Street Shrugs Off ECB Rate Cut -- Canadian Commentary


(RTTNews.com) - Canadian stocks are weak Thursday morning, with investors largely ignoring for now the additional stimulus measures announced by the European Central Bank, probably choosing to wait for the crucial U.S. monthly jobs report due tomorrow.

A disappointing U.S. jobless claims report and worries about the unrest in Ukraine where heavy fighting between pro-Russian separatists and Ukrainian Forces were reported, and probability of more sanctions on Russia appear to be weighing on sentiment to an extent.

The benchmark S&P/TSX Composite Index is down 23.33 points or 0.16 percent at 14,773.46, coming off a low of 14,736.39.

On Thursday, the index closed at 14,796.79, up 62.10 points or 0.42 percent, a six-year high.

AutoCanada Inc. (ACQ.TO) shares are rising nearly 4 percent after the company announced an upward revision to its acquisition guidance to complete an additional 8 to 10 dealership acquisitions over the coming 12 months. The company als said that it has extended employment agreement of its Chairman and Chief Executive officer Pat Priestner until 31 May 2019.

Just Energy Group Inc. (JE.TO) announced the sale of the shares of National Energy Corp., its water heater and HVAC home services business, to Reliance Comfort Limited Partnership, for a selling price of $505 million subject to certain potential adjustments at closing including working capital balances. The stock is up nearly 1.5 percent.

Goldcorp Inc. (G.TO) shares are up 1.3 percent. The company has priced an offering of senior unsecured notes aggreagating $1.10 billion, consisting of $550 million aggregate principal amount of 3.625% notes due June 9, 2021 and $450 million aggregate principal amount of 5.45% notes due June 9, 2044.

In the energy sector, First Quantum Minerals Ltd. (FM.TO), Lundin Mining Corporation (LUN.TO), HudBay Minerals Inc. (HBM.TO) and Sherritt International Corporation (S.TO) are down 0.5 to 1.2 percent. Meanwhile, Capstone Mining Corp. (CS.TO) is up in positive territory, gaining 1.3 percent.

Among big six banks, Royal Bank of Canada (RY.TO), Bank of Nova Scotia (BNS.TO) and Bank of Montreal (BMO.TO) are declining 0.5 to 0.7 percent.

In the healthcare space, Valeant Pharmaceuticals International, Inc. (VRX.TO) is down 1.6 percent, while Extendicare Inc. (EXE.TO) and Catamaran Corporation (CCT.TO) are modestly lower.

Air Canada (AC.B.TO) is climbing more than 4.5 percent. Meanwhile, Bombardier (BBD.B.TO) is down in negative territory, losing about 0.8 percent.

Gold stocks Kinross Gold Corporation (K.TO), Barrick Gold Corporation (ABX.TO), Timmins Gold Corp. (TMM.TO) and Silver Wheaton Corp. (SLW.TO) are up 1.3 to 2 percent.

In commodities, crude oil futures for July are down $0.43 or 0.41 percent at $102.21 a barrel.

Natural gas for July is down $0.033 or 0.71 percent at $4.607 per million btu.

Gold futures for August are up $9.90 or 0.8 percent at $1,254.20 an ounce.

Silver for July is up $0.241 or 1.28 percent at $19.033 an ounce. Meanwhile, copper is down $0.009 or 0.27 percent at $3.084 per pound.

On the economic front, building permits in Canada were up 1.1 percent in April, after declining in the previous two months.

In economic news from the U.S., the data released by the Labor Department showed initial jobless claims to have risen to 312,000 in the week ended May 31st, an increase of 8,000 from the previous week's revised level of 304,000. Economists had expected claims to climb to 310,000 from the 300,000 originally reported for the previous week.

In a significant move, the European Central Bank on Thursday cut its key interest rate to a record low of 0.15 percent and slashed its deposit rate to below zero, aiming to boost growth. Economists had expected a deeper cut in the refi rate to 0.10 percent.

The ECB also said more stimulus is on the way in the form of an undetermined amount of asset-backed security purchases.

ECB president Mario Draghi said the bank will offer long-term loans to banks at cheap rates for the next few years. Draghi also stated that more unconventional measures are likely it inflation stays too low.

Earlier, the Bank of England left its lending rate unchanged at a historical low of 0.5 percent.

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