TORONTO – The Toronto stock market closed little changed Monday as energy prices and stocks declined further after Iran and world powers arrived at an agreement about Iran’s nuclear program on the weekend.
The deal will allow Iran to keep the central elements of its uranium program while calling for it reduce enrichment to a level lower than what is needed for nuclear arms.
The S&P/TSX composite index closed down 6.12 points to 13,472.22, with further pressure coming from mining stocks as gold prices fell following the announcement of the Iranian deal.
“(Otherwise), any time you can remove a little bit of that geopolitical risk premium, it serves to bolster confidence a bit,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.
The Canadian dollar and other commodity-related currencies were lower Monday with the loonie losing 0.22 of a cent to 94.8 cents US.
U.S. indexes lost early momentum but the Dow industrials added 7.77 points to 16,072.54 on top of its record performance last week while the S&P 500 drifted 2.28 points lower to 1,802.48. The Nasdaq edged up 2.92 points to 3,994.57 after earlier pushing through the 4,000-threshold for the first time since September 2000.
Beyond Iran, attention is focused on the end of the week when investors get an indication of the success of the unofficial start of the U.S. holiday shopping season, otherwise known as Black Friday, so-called as it marks the start of the period when retailers make most of their money for the year.
But prior to that, trading will likely start to wind down somewhat ahead of American Thanksgiving on Thursday, when U.S. markets will be closed. New York markets are open for a half-session on Friday.
Also in the background are concerns that the U.S. Federal Reserve may decide to start cutting back on its US$85 of monthly bond purchases if economic performance allows. Those purchases have kept long-term rates low and encouraged investors to pile into the equity markets, resulting in the S&P 500 charging ahead 27 per cent year to date.
However, an increasing number of investors believe that stocks have run their course for 2013 and are due for a pullback soon.
“I would like to see this market take a breather,” said Jim Lauder, a fund manager for Wells Fargo Advantage Dow Jones Target Date Funds in New York.
The energy sector was down almost one per cent. The January crude contract on the New York Mercantile Exchange fell 75 cents to US$94.09 a barrel, even though the agreement does not loosen sanctions on Iran’s oil exports.
The deal with Tehran announced on the weekend raises the possibility that a more comprehensive agreement would eventually allow Iran to restore oil production to pre-sanctions levels. That could add one million barrels of oil a day to world markets, which would be enough to meet the entire global growth in demand for 2014 projected by the International Energy Agency.
Suncor Energy (TSX:SU) gave back 72 cents to C$37.24.
The base metals sector shed about one per cent with December copper up a penny at US$3.22 a pound. Teck Resources (TSX:TCK.B) lost 43 cents to C$26.07.
The TSX gold sector was down well over one per cent during the session but ended up flat as increased risk appetite pushed December bullion down $2.90 to US$1,241.20 an ounce. Agnico Eagle Mines (TSX:AEM) gained 48 cents to $28.04 while Detour Gold Corp. (TSX:DGC) fell 50 cents or 11.7 per cent to $3.77 amid an announcement that company founder and CEO Gerald Panneton has resigned, effective immediately.
Industrials led advancers as Canadian Pacific Railway (TSX:CP) improved by $2.07 to $161.11.
In corporate news, auto parts maker Martinrea International (TSX:MRE) was a major TSX decliner, down 77 cents or 8.37 per cent to $8.43. The slide followed a 13 per cent drop Friday, when it crossed below its 200-day moving average, an important technical indicator.
Shares in Canadian cheese giant Saputo (TSX:SAP) were six cents higher to $48.60 after the company sweetened its bid for Australia’s oldest dairy processor. The company is offering A$9.20 per share if it acquires a majority of Warrnambool Cheese and Butter shares, which adds 20 cents per share to its unconditional offer and bests offers from two local rivals.