TORONTO (Reuters) - Canada’s main stock index slipped marginally in light trade on Monday, with major gold miners weighing heavily as bullion headed for its worst annual performance in 32 years, while gains for some financial stocks softened the blow.
Still, the index wasn’t far off its Friday peak, which was the highest level seen since mid-2011. Investors expressed optimism that 2014 will exceed that roughly 9 percent gain the Toronto index is on track to notch this year.
“I think commodities will outperform next year,” said Marcus Xu, a portfolio manager at MY Capital Management in Vancouver.
Canada is home to an abundance of resource-related companies, whose struggles have partly explained the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE underperformance versus U.S. indexes this year.
Xu said the price of various resources was weighed down by investors concerned about Chinese growth and troubles in China’s financial and real estate sectors, and that those issues were being resolved after a leadership transition.
The Canadian index has sharply underperformed the broad S&P 500 .SPX index, whose 30 percent gain has driven it to all-time highs.
The annual gain for the S&P 500 and other U.S. indexes was supported by the U.S. Federal Reserve’s massive stimulus efforts, which the central bank only this month decided to start to trim.
“On balance, we believe 2014 is going to be a better year than 2013,” said John Kinsey, a portfolio manager at Caldwell Securities. “That’s based on some of the economic numbers...the U.S. reduced their taper, they seem to think their economy is going to find some traction.”
The Canadian index ended down 6.59 points, or 0.05 percent, at 13,581.39. It traded in a tight 25-point range in the session.
On the positive side, Valeant Pharmaceuticals International Inc VRX.TO gained 2.8 percent to C$124.94, Toronto-Dominion Bank (TD.TO) added 0.4 percent to C$100.08, and Bank of Nova Scotia (BNS.TO) rose 0.5 percent to C$66.22.
The price of gold has fallen nearly 30 percent this year, weighing on the many mining companies listed in Toronto and dragging down the index as a whole.
An index of global gold miners, mostly Canadian companies, has fallen 48 percent this year.
Caldwell’s Kinsey said that the depressed price of gold - now at $1,200 an ounce - should lead to mine closures which in turn would put a floor under the price and help the sector stabilize next year.
MY’s Xu wasn’t so sure. “Gold is still under a lot of pressure. I’m not as eager to jump into the gold sector versus the other commodity sectors,” he said.
Editing by Meredith Mazzilli and Leslie Adler