TORONTO (Reuters) - Canada’s main stock index fell on Wednesday, hit by disappointing results from Cenovus Energy Inc (CVE.TO) and Canadian Pacific Railway Ltd (CP.TO) as investors processed a flood of earnings reports from the country’s top corporations.
The TSX index was also yanked lower by a 4.6 percent drop in gold-mining shares, which fell with the price of bullion, as the market meanwhile digested more evidence of economic recovery in Europe, a manufacturing rebound in the United States, and growing signs of a slowdown in China.
Strong results from Loblaw Cos Ltd (L.TO), Canada’s biggest grocer, and Rogers Communications (RCIb.TO), the country’s biggest wireless company, helped drive up shares of those companies but failed to push the index into positive ground.
Wednesday’s fall was the second straight for the TSX after a four-day rally. It has trailed the S&P 500 .SPX badly this year.
“The TSX is struggling to catch up with the S&P 500,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver. “The core thesis is that risk appetite needs to make a comeback.”
Negative sentiment on the index, he said, “is partly earnings driven and partly driven by a tendency to take profits after a fairly decent run.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE, which briefly touched a seven-week high on Tuesday, closed down 73.08 points, or 0.57 percent, at 12,672.30.
“It’s hard to get too excited about the Canadian market as you have the drag from the golds and the materials side,” said Gavin Graham, chief strategy officer at Integris Pension Management Corp.
“But companies like Rogers and Loblaw are showing that the nonresource side of things is actually doing quite well,” he added.
Shares of Loblaw rose 3.2 percent to C$49.46 after it reported a higher quarterly profit as food and clothing sales both rose, prompting the company to raise its forecast for full-year operating income.
Rogers reported a steep rise in wireless data revenue for the second quarter. The stock climbed 1.8 percent to C$41.95.
But CP Rail reported a slightly lower-than-expected quarterly profit, hurt by floods and a number of high-profile derailments. The stock stumbled 2.1 percent to C$127.44.
The materials sector, which includes mining stocks, lost 3 percent due to the weakness in gold producers. Goldcorp Inc (G.TO) lost 4.7 percent to C$29.24, and Barrick Gold Corp (ABX.TO) fell 5.4 percent to C$17.67.
Shares of energy companies gave back more than 1.6 percent, with lower oil prices hitting sentiment.
Cenovus Energy Inc’s (CVE.TO) second-quarter operating profit missed analysts’ expectations by a wide margin as higher crude costs hurt refining operations. The oil producer dropped 5.5 percent to C$30.49 and played the biggest role of any single stock in pushing the index lower.
Encana fell 1.9 percent to C$17.78 despite a 25 percent increase in second-quarter operating profit at Canada’s largest gas producer as its move to spend the bulk of its budget on developing more lucrative oil- and liquids-rich natural gas plays paid off.
Six of the index’s 10 main sectors, including the weighty financials group, were higher.
Editing by Peter Galloway