Market Update, Friday, 1st November, 2013:

By Musabbir Mazhar

Canada’s main stock index, the S&P/TSX composite index closed 23.80 points lower, or 0.18% lower, at 13,337.46. It was weighed down by the giant gold miner Barrick Gold Corp. (TSX:ABX) which ended the day falling 7.45% to 18.77 C$ after the miner announced of a $3 billion stock offering. The S&P 500 ended at 1761.64, or 0.29% higher after hitting record high levels earlier on Wednesday. This is the straight gain in the index for the fourth week in a row with the Fed deciding not to taper the $85 billion monthly asset purchases. The DJIA ended up at 15,615.55 or 0.45% higher, the Nasdaq was 2.34 points higher at 3022.04.

The Canadian GDP growth came out at 0.3% in August as reported by statistics Canada on Thursday, which was higher than Analysts’ from a Reuters survey of 0.2%. RBC Canadian Purchasing Managers’ Index (PMI), a monthly survey in partnership with Markit, increased to its peak at 55.6 in 30 months in October, up from 54.2 in September. A PMI reading higher than 50 reflects an expanding manufacturing sector relative to previous month. The ISM PMI increased to 56.4% from 56.2% in September, which is the highest level reached in 2013, reflecting a positive manufacturing environment in the US.

China’s Official PMI rose to 51.4 in October from 51.1 in September; PMI reading from HSBC and Markit which includes more small businesses/companies rose to 50.9 from 50.2. Although this is optimistic, particulars show that the rise was a result of stronger output, but new orders and new export orders from abroad both decreased in October. This suggests slower demand growth in the months ahead. China is expected to grow at 7.8% this year. We are seeing pick-up in growth after launch of a fiscal mini-stimulus program by the government of about $130 billion or 829.29 yuan in investment projects.

Gold for delivery in December traded at $1,313.20 an ounce on Nov. 1 on the Comex in NY.  Gold plummeted 21.5 percent in 2013 as the metal was sold by investors from exchange traded products as a recovery in the economy is expected. Barrick Gold Corp issued equity of at least 163.5 million shares for $18.35 per share. The company plans to use $2.6 billion of the $3 billion proceeds to pay back a portion of the company debts by buying back bonds. This reflects the company’s bearish view on commodity prices. The equity offering is underwritten by RBC Capital Markets, Barclays Plc and GMP Securities.

The Canadian Dollar traded at 95.9 cents US. The CAD/USD was almost unchanged this week. Unemployment rate in Canada dropped to 6.9% in September which is the lowest level in 5 years; estimate for October is at 7.0%.