Banks, resources pull Toronto stocks lower

17 Jan, 2010

Toronto's main stock index took a broad hit on Friday, falling more than 1 percent as weakness in energy, materials and banking groups combined to wipe out the last vestiges of the gains the index made as the new year dawned. Commodity prices fell and bank shares were hit by concerns over a bank fee proposed by US President Barack Obama, as well as by disappointing results from J.P. Morgan Chase & Co.
J.P. Morgan reported deep fourth-quarter loan losses that raised concerns about earnings for the broader US bank sector. Royal Bank of Canada lost 1.7 percent to C$54.81 to lead all heavyweight decliners, while Toronto-Dominion Bank wasn't far behind with a 1.54 percent decline to C$63.35.
Corporate results over the next several weeks will likely drive the direction of equity markets. J.P. Morgan's results, along with falling commodity prices, overshadowed better-than-expected numbers from chipmaker Intel. "We were lower right from the get-go because there were a couple of factors that offset the news from Intel," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.
"Investors chose to focus on J.P. Morgan's numbers. Their somewhat cautious outlook put a dampener on investors' optimism, and we have commodity prices under pressure yet again. These factors combined to take a pretty big toll on the index today." Other heavyweight names on the downside included Kinross Gold, which dropped 4.77 percent to C$19.75, while Suncor Energy dropped 2.1 percent to C$36.71.
The Toronto Stock Exchange's S&P/TSX composite index closed down 119.01 points, or 1.01 percent, at 11,685.37. All 10 of the index's main sectors dropped, with the mining-heavy materials group leading the way. All the gains made in the first sessions of the new year, which included a brief rally above 12,000, were erased on Friday. The index ended 2009 at 11,746.11.

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