Bleak US Housing Outlook, Lower Commodities Prices Weighing On Canadian Market In Early Dealing - Canadian Commentary

With a black cloud looming over the US economy in the form of a bleak housing market picture, the Canadian market has seen significant weakness at the start of trading Tuesday. The S&P/TSX Composite Index had rallied to gains over the last two sessions, but a dip in commodities prices could limit recovery efforts by the Toronto exchange over the course of the day.

The main index is down 51.94 at 13251.03, with resources shares proving to be the biggest drag in the early going.

The price of bullion is nearly flat at $644.40 per ounce in New York’s early dealing, but the Gold Index is reflecting notable weakness in the gold sector. Centerra Gold (CG.TO) is adding to losses from the previous session, falling nearly 6 percent to challenge a 6-month low.

The Diversified Mining and Metals Index is down 0.5 percent after jumping to an all-time closing high in the previous session. The price of copper is down $0.04 at $3.09, hampered by disappointing US new home sales data. Blue Pearl Mining (BLE.TO) is one of the sector’s biggest losers, down 1.6 percent.

The Energy Index is moving in the red along with the price of crude for May. After rising for the previous 5 sessions, the price of crude is down $0.40 at $62.52. Shares of UTS Energy Corporation (UTS.TO) are down 2.5 percent after the company announced that early analysis of its Athabasca Oil Sands Area 2007 drilling program is “extremely encouraging” and sufficient to support a stand-alone mining project.

The industrials sector has gotten off to a poor start, burdened by a dismal performance from ATS Automation (ATA.TO). ATS stock has fallen over 12 percent to a new multi-year intraday low.

Overall, weakness has been widespread, with every sector now moving in negative territory.

In corporate news, Gilden Activewear (GIL.TO) is cutting over 1,800 jobs in Canada and Mexico to transfer work to Central America and the Carribean Basin. Gilden shares are up marginally in early dealing.