Canada Stocks-tsx Hits 2-week Low On U.s. Fears; Posts Q3 Gain

Canada’s Economy Rebounds in July as Construction Resumes

Congress, still in partisan deadlock on Monday over Republican efforts to halt President Barack Obama’s healthcare reforms, was on the verge of shutting down most of the U.S. government starting on Tuesday morning. “There is some nervousness as we approach the shutdown deadline, but there are no signs of panic yet,” said Elvis Picardo, strategist at Global Securities in Vancouver, adding that the Canadian market is viewing the debt crisis as a U.S. issue. “Investors believe that there will be a resolution to this problem,” he added. “It may not occur today or tomorrow, but it’s certainly what they’re hoping for.” The Toronto Stock Exchange’s S&P/TSX composite index closed down 56.89 points, or 0.44 percent, at 12,787.19, after falling s low as 12,734.71, its lowest since Sept. 16. All of the 10 main sectors on the index were in the red. For the third quarter, the TSX advanced 5.4 percent, compared with a 4.7 percent gain by the S&P 500. Helped by a rebound in appetite for commodities, the benchmark Canadian index has been regaining ground lost in the first half of the year. “I doubt if we’ve seen the highs for the year for the TSX,” Picardo said. “I still think there are more legs to the rally.” Tracking a drop in the price of oil, shares of energy producers shed 0.5 percent.

have priced out Canadian imports. Faced with declining volumes, TransCanada raised short-term tolls in July to try to get shippers to sign on to long-term contracts. Instead, a record amount of Canadian gas flowed into western storage. Prices this month reached their widest discount to the U.S. benchmark in five years. Regional gas storage reached 472.7 billion cubic feet last week, or 98 percent of the capacity surveyed by energy information firm Canadian Enerdata Ltd., above the previous record on Oct. 20 last year of 472.5 billion. The discount of AECO gas to Henry Hub reached $2.051 on Sept. 20, its widest level since Sept. 24, 2008. Market Sensitivity The strengthening price of AECO gas due to the toll changes last week underscores the sensitivity of this market right now, when youve got fundamentals stacked up against you, in terms of high storage supplies and weak demand, King said in an interview from Calgary. Price are expected to rise once colder weather brings winter heating demand.

Canada Gas Narrows Discount as TransCanada Lowers Shipment Cost

Output rose 0.6 percent to an annualized C$1.58 trillion ($1.54 trillion), the biggest gain since July 2011, as the economy recovered from a construction strike in Quebec and flooding in Alberta , Statistics Canada said today in Ottawa. GDP had fallen 0.5 percent in June, the biggest decline since the 2009 recession. The median forecast in a Bloomberg economist survey was for 0.5 percent growth in July. After an initial burst following the recession, Canadas economy began to slow last year amid weak global demand for its goods and a slump in business investment. Bank of Canada Governor Stephen Poloz has predicted a recovery in exports will help fuel a rebound starting in the second half of this year, which will eliminate slack in the nations economy by 2015 and lead to higher policy interest rates. We are not as bullish as the Bank of Canada in terms of the contribution of exports to GDP growth, said Krishen Rangasamy , senior economist at National Bank Financial in Montreal , who forecasts the central bank will wait until 2015 to increase borrowing costs. Todays data are better than expected, but in our view it doesnt change anything in terms of monetary policy, Rangasamy said in a telephone interview. The Canadian dollar rose 0.1 percent to C$1.0295 per U.S. dollar at 12:53 p.m. in Toronto. Investors are pricing in less than a 50 percent chance of a rate increase by the end of next year, according to trading in overnight swaps. Accelerating Growth The central bank forecast in July that growth will accelerate to a 3.8 percent annualized pace in the third quarter after slowing to 1.7 percent in the second quarter. Economists surveyed by Bloomberg this month forecast a 2.1 percent rate from July to September. Canada has averaged annualized quarterly growth rates of 1.3 percent since the start of 2012, down from 3 percent in 2010 and 2011. The bigger story here is that underlying growth is still just quietly grinding along at a modest pace, Doug Porter , chief economist at Bank of Montreals capital markets unit in Toronto, said in a note to investors.