Toronto stock market weighed down by falling telecommunications sector

TORONTO — Canada's main stock index fell midweek as the telecommunications sector retreated after Rogers Communications cut its revenue and capital spending forecasts for the year.

The sector was the biggest mover Wednesday, losing 5.1 per cent as Rogers shares fell 8.1 per cent to a new 52-week low while competitors also lost ground.

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The decreases came after the Toronto-based company cut its revenue outlook for the year due to the popularity of new unlimited wireless data plans.

"The communications sector is largely what's driving the decline in the TSX, where in the U.S. things are a little bit more balanced," said Candice Bangsund, portfolio manager for Fiera Capital.

Monday's election of a Liberal minority government may also be having some lingering impact because of the party's promise to lower cellphone rates, she added in an interview.

The S&P/TSX composite index closed down 55.59 points at 16,335.93.

Eight of the 11 major sectors of the TSX were lower, with technology and industrials falling as those sectors also dropped in the U.S. on weaker corporate results.

Health care rose 1.5 per cent as shares of cannabis company Hexo Corp. climbed 3.5 per cent after it postponed the fourth-quarter earnings release as it announced a $70 million private placement of convertible debentures led by a group of investors, including its chief executive.

Materials was up 0.51 per cent with Eldorado Gold rising 2.3 per cent on higher metals prices.

The December gold contract was up US$8.20 at US$1,495.70 an ounce and the December copper contract was up 3.85 cents at US$2.67 a pound.

Energy got a lift from higher crude oil prices following a bullish U.S. government report that pointed to a surprise drop in U.S. crude inventories compared to an expected sizable increase.

"Oil is the one winner today actually," said Bangsund.

The December crude contract was up US$1.49 at US$55.97 per barrel and the November natural gas contract was up one cent at US$2.28 per mmBTU.

Higher oil prices also helped the loonie to set a new three-month high as the Canadian dollar traded for an average of 76.42 cents US compared with an average of 76.37 cents US on Tuesday.

In New York, the Dow Jones industrial average was up 45.85 points at 26,833.95. The S&P 500 index was up 8.53 points at 3,004.52, while the Nasdaq composite was up 15.50 points at 8,119.79.

U.S. markets rose as corporate results continued to exceed some pessimistic expectations. More than 80 per cent of the U.S. companies reporting so far in the quarter have surpassed expectations on the S&P 500, outpacing the forecast for a four per cent drop in earnings.

"It's a number that's quite important given all of the uncertainty out there but the bar for a positive surprise has been quite low."

Bangsund the focus has turned to earnings because of a lack of notable economic or central bank developments, while there appears to be progress in trade negotiations between the U.S. and China along with Brexit.

"We're seeing equity markets broadly taking a breather today and striving for direction.

This report by The Canadian Press was first published Oct. 23, 2019.

Companies in this story: (TSX:RCI.B, TSX:HEXO, TSX:ELD, TSX:GSPTSE, TSX:CADUSD=X)

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