Bank stocks were among the most heavily weighted decliners on the SP/TSX composite index on Tuesday as news of a stalemate in Greek debt negotiations dragged down Canada’s benchmark stock index.
The SP/TSX composite index dropped for the first time in five sessions, closing at 12,395.24, a loss of 126.47 points, or 1.01%. Nine of the 10 sub-indexes declined, with consumer goods the sole gainer. Industrials led the declines, falling 1.8% as Canadian National Railway retreated 4.7% to $75.86 despite hiking its dividend and reporting fourth-quarter earnings that blew past expectations. Investors were reacting to its 2012 forecasted earnings of $5.32 a share, below analysts’ estimates of $5.39, according to the average estimate in a Bloomberg survey.
Meanwhile, the financials sub-index slipped 0.91% after Greek debt negotiations stalled when EU finance ministers rejected as insufficient an offer made by creditors to help restructure Greece’s debts.
Royal Bank of Canada shares slipped 0.9% to $53.79, Toronto Dominion fell 1.09% to $79.30 and Bank of Nova Scotia saw its share price drop 1.08% to $53.96.
While the idea of a Greek default is spooking investors, in the end it would be “uncatastrophic,” Michael Shaoul, chairman of Marketfield Asset Management in New York, told Bloomberg. “There would be a bad, short, sharp reaction by the market, and then we’d all get on with it. There’s going to be a deep loss suffered by the private holders of Greek debt whether you have a deal or default.”
Energy issues, which drove gains in Toronto the previous day, declined Tuesday even as natural gas prices rose another 1.1% in New York.
Encana fell 0.68% to $18.87 after posting a big gain the previous day, and Canadian Natural Resources slipped 0.57% to $39.98.
The materials sub-index fell 1.72% after analysts downgraded two of that sector’s heavy hitters, Potash Corp. of Saskatchewan and Barrick Gold. Potash Corp. shares fell 2.24% to $44.90 and Barrick saw its share price decline 2.81% to $45.95.
Quadra FNX mining fell 3.31% to $14.60 after the Treasury Ministry in Poland said it wanted more information about state-owned KGHM Polska’s acquisition of the Canadian company.
The price of crude oil fell 63 US cents to US$98.95 a barrel on Tuesday. Gold dropped US$13.80 to US$1,664.50 an ounce.
The Canadian dollar fell 25 basis points to 99.02 US cents.
Canada’s junior Venture exchange lost 12.63 points, or 0.79%, closing at 1,576.29.
Markets in the U.S. were quiet ahead of Tuesday night’s State of the Union address. The Dow Jones industrial average fell 33.07 points, or 0.26%, to 12,675.75, while the Nasdaq composite was just above flat at 2,786.64, a gain of 2.47 points, or 0.09%.
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