GOLD SECTOR ADDS TO YEAR’S BIG LOSSES
TORONTO • The Toronto stock market closed slightly lower Monday as gold stocks continued to add to huge losses already racked up this year.
The S&P/TSX composite index shed 6.59 points to 13,581.39 amid thinner than usual volumes as 2013 trading winds down.
“(Traders) are looking at 2014 and thinking, what is the investment thesis, what do we feel good about, what’s going to be different next year. That’s what we’re doing,” said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company, who added that 2014 looks challenging for the TSX.
“I think you will see a lot of dissimilar things in terms of the U.S. outperforming Canada. You’re going to continue to see a slowing of growth coming out of China which will impact the commodity space.”
The Canadian dollar clawed back a chunk of Friday’s three-quarters of a cent tumble, up 0.56 of a cent to US93.98¢.
New York markets turned in a mixed performance with the Dow Jones industrials up 25.88 points at 16,504.29, the Nasdaq lost 2.39 points to 4154.2 and the S&P 500 index dipped 0.33 of a point to 1841.07.
The gold sector led TSX decliners, down about 3% and adding further damage to a sector already down about 50% for the year. The latest decline came as February bullion lost $12.30 to US$1,203.80 an ounce, bringing the overall price drop for the year to about 28%.
Gold prices have taken a big hit this year as the global economy gradually improved and the U.S. Federal Re- serve moved to cut back on a key area of stimulus, its monthly bond purchases.
“You had the perfect storm,” said Mr. Pashootan. “On a valuation basis, the shares weren’t cheap because they had appreciated considerably for the last decade, especially the last five years, so it was at a much higher (valuation) than we had seen in the last 10 years. Then you had every factor work against it, with the economy improving, with the Fed tapering, this type of thing.” Goldcorp gave back 86¢ to $22.25 while Iamgold fell 21¢ to $3.50.
The energy sector was 0.36% lower as the February crude contract on the New York Mercantile Exchange dropped US$1.03 to US$99.29 a barrel. Suncor Energy was down 36¢ at $36.88.
The consumer staples component led advancers, up 0.67% with grocer Loblaw up 55¢ at $42.55.
The tech component was ahead 0.57% with Constellation Software ahead $9.62 to $226.23 while MacDonald Dettwiler & Associates climbed $1.56 to $82.48.
The TSX is preparing to end 2013 with a respectable advance of about 9%. Gains would have been greater if not for deep losses in the mining sectors. In addition to the big losses in gold, the base metals component has retreated 22%.
In sharp contrast, the Dow industrials has plowed ahead 26%.
This has also been a strong year for many overseas markets, with Frankfurt’s DAX up 26%, the Paris CAC up 18.4% and London’s FTSE 100 gaining 14%. But none matched Tokyo’s Nikkei 225, which soared 56.7% in 2013 on renewed confidence in the economy after years of feeble growth.