TSX little changed, traders focus on U.S. election, fiscal cliff resolution

TORONTO -- The Toronto stock market closed slightly lower Monday with traders not wanting to make big commitments ahead of a U.S. election Tuesday that is deemed too close to call.

Energy and financial stocks led the way as the S&P/TSX composite index declined 27.63 points to 12,352.78, while the TSX Venture Exchange slipped 8.1 points to 1,301.93.

The Canadian dollar closed down 0.11 of a cent to 100.33 cents US amid data showing a sharp drop in building permits issued in September. Statistics Canada reported the value of permits fell 13.2 per cent to $6.5 billion. The decline was mainly due to a 30.8 per cent drop in the non-residential sector.

U.S. indexes racked up minor gains as traders also took in a worse than expected reading on the American service sector.

The Institute for Supply Management said its gauge of non-manufacturing activity declined to 54.2 in October from 55.1 in September, lower than the 54.5 reading that economists expected.

The Dow industrials climbed 19.28 points to 13,112.44.

The Nasdaq composite index was 17.53 points higher at 2,999.66 and the S&P 500 index advanced 3.06 points to 1,417.26.

Tuesday's election appears to be going down to the wire, though most opinion polls indicate that President Barack Obama may have the edge over Mitt Romney in crucial swing states.

After the election, attention will turn to dealing with the looming fiscal cliff facing the U.S. economy.

The "fiscal cliff" refers to a variety of tax hikes and massive budget reductions that will come into effect at the end of December unless Republicans and Democrats can come together with an alternative budget plan. Economists warn such a shock could send the economy back into recession. International Monetary Fund chief Christine Lagarde recently warned that Canada would not escape the fallout from that.

"There needs to be some resolution, this is a perfect first issue to tackle," said Paul Vaillancourt, chief executive officer at Canadian Wealth Management in Calgary.

"It's a daunting one but whether it's Romney moving more toward the centre or Obama needing to find bipartisan co-operation, this is the first issue to tackle and I have confidence that either party, either president will tackle. We have all seen the projections and they could be disastrous if there is a stalemate."

Also weighing on sentiment was the possibility that a clear-cut winner won't emerge by Wednesday morning.

The energy sector declined 0.32 per cent with the December crude contract up 79 cents at US$85.65 a barrel. Suncor Energy (TSX:SU) was down 21 cents to C$34.44.

The market was also weighed down by a 0.27 per cent decline in the financial group. National Bank (TSX:NA) shed 40 cents to $77.

Consumer staples stocks were also weak with grocer Loblaw Cos. (TSX:L) down 38 cents to $34.04.

The gold sector was off 0.2 per cent on top of a steep loss Friday after a positive U.S. jobs report sent the American currency higher and gold prices down more than $40.

On Monday, the December bullion contract on the New York Mercantile Exchange rose $8 to US$1,683.20 an ounce and the gold group was ahead per cent. Goldcorp Inc. (TSX:G) climbed 35 cents to $43.26.

The base metals segment gained 0.59 per cent while December copper dipped one cent to US$3.47 a pound. Turquoise Hill Resources ran up 88 cents or 10.9 per cent to $8.95 following a power supply deal for its Oyu Tolgoi copper-gold mine in Mongolia. HudBay Minerals (TSX:HBM) was up 26 cents to C$9.67.

The tech sector rose 0.57 per cent while Research in Motion Ltd. (TSX:RIM) was off early highs, up 15 cents to $8.87 after going as high as $9.14, the first time it had moved above $9 since June 28. The stock has been on a roll since last Wednesday when the company said its new BlackBerry smartphones are being tested by 50 phone carriers around the world. President and CEO Thorsten Heins called the move a "key step"' for the BlackBerry phones and BlackBerry 10 operating system.

Renewed concerns over Greece also weighed on investors Monday as two votes in the country's parliament this week could well determine if the cash-strapped country stays in the euro.

On Wednesday, Greek legislators are expected to vote on a C13.5-billion austerity package required by international creditors for the release of the next batch of the country's bailout funds. Without the cash, Greece faces bankruptcy.

If, and when, the package of spending cuts and tax increases is passed, legislators will then have to approve the 2013 budget. That vote is scheduled for Sunday.

The prevailing view in the markets is that both votes will get passed but the margin of error is slim, given that a junior partner in the coalition government has said it will vote against the austerity bill if certain labour reforms are not extracted.

In corporate news, Silver Wheaton Corp. (TSX:SLW) said its net income fell by 11 per cent to US$119.7 million or 34 cents per share. The company's revenue was down 13 per cent year over year to US$161.3 million, mostly as a result of lower prices for silver. The company declared a dividend of seven cents per share, about 20 per cent of the cash generated by operations in the quarter. Its shares dipped 57 cents to $38.88.