Dundee Industrial prepares to make splash with big IPOFrank Gunn/The Canadian Press
The Toronto stock market was lower at midday, led by declining oil and mining stocks as investors nibbled at profits from last week's sharp runup.
The S&P/TSX composite index was down 78.49 points to 12,658.43, giving back a chunk of last week's resource sector-led gain of 1.5 per cent.
"There's still pessimism and evidence that the slowdown in China is permanent and so you're going to see money managers taking profits after a run like we've seen," said Kash Pashootan, vice president and portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
The Canadian dollar was up 0.02 of a cent to 96.78 cents US amid rising U.S. bond yields.
U.S. indexes were generally tepid amid a dearth of economic or corporate data as the Dow Jones industrials edged up 3.71 points to 15,085.18, the Nasdaq composite index was up 16.54 points to 3,619.32 while the S&P 500 index was up 1.39 points to 1,657.19.
The major event for markets this week is the release Wednesday of the U.S. Federal Reserve's minutes from its most recent meeting at the end of last month. Investors hope to get a better idea of the pace at which the Fed will start to wind up a key measure of economic stimulus next month.
Recent economic data and public statements by Fed policymakers have reinforced the point of view that the central bank will begin tapering its $85-billion a month in bond purchases as early as September. The policy, which is intended to lower interest rates to shore up the U.S. recovery, has also been credited for a strong rally on many global markets.
Speculation about Fed tapering continued to send U.S. bond yields higher with the benchmark 10-year Treasury at 2.87 per cent Monday morning, up over 100 basis points since early May.
The mining sector led TSX decliners, down 1.36 per cent as September copper dipped three cents to $3.33 (U.S.) a pound. Teck Resources (TSX:TCK.B) fell 36 cents to $28.34 (Canadian).
The September crude contract on the New York Mercantile Exchange was off the worst levels of the session, heading up 17 cents to $107.63 (U.S.) a barrel and the energy sector was down 0.8 per cent. Canadian Natural Resources (TSX:CNQ) declined 54 cents to $30.96 (Canadian).
The gold sector lost 0.45 per cent while December bullion dropped $4.70 to $1,366.30 (U.S.) an ounce. Iamgold (TSX:IMG) faded six cents to $6.47 (Canadian) but Goldcorp Inc. (TSX:G) rose 26 cents to $32.35.
Outside of the resource sector, financials were also a major drag, down 0.5 per cent with Manulife Financial (TSX:MFC) down 33 cents to $17.33.
Consumer staples also weighed with grocer Loblaw Cos. (TSX:L) down $1.12 to $45.42.
In corporate news, American retailer Saks released its financial report a day early and like Wal-Mart, Macy's and Nordstrom last week, disappointed Wall Street. Saks' loss of $19.6-million (U.S.) was even deeper than analysts had expected.
Saks didn't hold a conference call because it's being acquired by Hudson's Bay Co. (TSX:HBC) and it gave no outlook. On the TSX, HBC stock rose five cents to $17.33.
J.C. Penney, Target, Gap, Home Depot, Best Buy, Barnes & Noble, Staples and Sears all report quarterly results this week.
Worries about Fed tapering helped push the Dow industrials down 2.2 per cent last week but Pashootan observed that there's another reason.
"U.S. stocks are simply becoming expensive," he said.
"You look at where bond yields are headed, you look at tapering, you look at the result of rising rates and you combine all of that with valuations that are considerably more expensive than they were six months ago and that would all lead to us positioning yourself to not be surprised to see the U.S. markets here soften by 10 per cent."
Last week's decline still left the Dow up 15 per cent year to date.
Other key events this week include the release of Canadian retail sales data for June on Thursday and inflation data for July on Friday.
Beyond the release of the Fed minutes Wednesday, traders will also look to existing home sales data for July on Wednesday and new home sales for July on Friday.
European bourses were negative with London's FTSE 100 index down 0.41 per cent, Frankfurt's DAX declined 0.2 per cent while the Paris CAC 40 index off 0.97 per cent.
Earlier in Asia, South Korea's Kospi fell 0.1 per cent, Hong Kong's Hang Seng declined 0.2 per cent while Australia's S&P/ASX 200 fell less than 0.1 per cent. Trading was suspended in the Philippines due to severe flooding. Mainland Chinese shares rose.
One of the day's few gainers was Japan's Nikkei 225 index, which closed 0.8 per cent higher.