Potash, Teck Resources Hold the TSX Back

Could have been worse!

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

A day that began so poorly didn’t turn out too badly after all.  A weaker than expected Chinese manufacturing number and nervousness over what the Fed had to say on Wednesday had markets around the world in a skittish state earlier today.  And after opening down, the U.S. (at least the Dow) was in fact able to rise above the global action and briefly crossed into positive territory during the afternoon session, although markets south of the border still finished in the red.

The Canadian market stayed down all day with the S&P/TSX Composite (INDEX:^GSPTSE) finishing down 94 points or 0.7%.  Given our correlation with Chinese economic stats, it could have been worse.

Pinning the TSX down were two resource heavyweights.  Potash Corp. (TSX:POT) was the leading detractor as the stock fell 2.1% with Teck Resources (TSX:TCK.B) and its 4.3% decline close on its heels.  Both were potentially victims of the weak Chinese manufacturing data, although Teck has the more explicit link.

The big names that helped hold the market in on this day were Encana Corp. (TSX:ECA) and Kinross (TSX:K).  Yes, Kinross, one of those gold companies the market loves to hate!  Encana finished up 1.8% on the day as the price of natural gas was strong.  NYMEX Natural Gas climbed 1.6% to finish at $4.25/MMBtu.  And Kinross, up 1.9%, was part of a collection of gold names that finished the day in the green.  A 1.6% gain from the commodity provided a tail wind for this group.

Once again resource stocks dictated the Canadian market’s performance.  Because of their heavy-weights in the TSX, these stocks can be lethal for investors that think they are protected with an index fund or ETF linked to the S&P/TSX Composite Index.

We have prepared a Special FREE Report that will clue you into the perils of investing in this kind of product and suggests an easy to implement alternative strategy.  It’s called “5 Stocks That Should Replace Your Canadian Index Fund” and you can receive a copy at no charge – just by clicking here.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler is short $40 July 2013 put options on Potash, $26 August 2013 put options on Teck, and is also long shares of both.  The Motley Fool doesn’t own shares in any of the companies mentioned.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

Payday ringed on a calendar
Dividend Stocks

How to Convert $500 Monthly Investment Into $200 Monthly Income

If you want the stock market to give you regular monthly income, you have to invest in the stock market…

Read more »

falling red arrow and lifting
Investing

RRSP Investors: 3 Dividend Stocks to Buy on the Dip

Inflation has delayed retirement for Canadians. RRSP investors should buy cheap dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS).

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

worry concern
Dividend Stocks

3 Ultra-Safe Dividend Stocks for Jittery Investors

Motley Fool investors nervous about the market downturn should consider these ultra-safe dividend stocks that keep paying passive income no…

Read more »

Economic Turbulence
Cryptocurrency

The TSX’s 1st Crypto ETF Lost $500 Million in 1 Day

The TSX’s first crypto ETF lost $500 million is one day and is down nearly 58% year to date.

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

Is the Real Estate Boom Finally at an End?

It might be hard to believe, but Canada’s decades-long housing boom might be at an end.

Read more »

stock analysis
Investing

RRSP Investors: 2 Oversold TSX Financial Stocks to Buy for Total Returns

Top TSX financial stocks look oversold right now for RRSP investors seeking attractive dividends and total returns.

Read more »

Investing

Got $500? 3 Undervalued TSX Stocks for Superior Returns

These undervalued stocks have strong potential for growth and will likely generate superior returns in the long term.

Read more »