Canadian markets opened down Wednesday as the U.S. consumer prices index fell and investors worried that the U.S. could be facing deflation.
The Toronto Stock Exchange's benchmark, the S&P/TSX composite index, was down 25.99 points, or 0.28 per cent, to 9,205.63.
The Canadian dollar was down to 82.31 cents U.S. after closing at 82.37 cents U.S. Tuesday.
Oil was up to $49.76 U.S. a barrel, from its previous finish of $49.41 U.S., as OPEC slashed its forecast for oil demand for the eighth month straight. OPEC says demand will contract by 1.37 million barrels a day this year, or 1.6 per cent. Gold rose to $892.60 U.S. an ounce after closing at $892 U.S. Tuesday.
The Dow Jones industrial average was down 43.57 points or 0.55 per cent to 7,876.61 early Wednesday and the Nasdaq composite index lost 13.92 points, or 0.86 per cent to 1,611.80.
Data released Wednesday showed U.S. consumer prices experienced the first outright decline since 1955, dropping 0.4 per cent in March from the same month the year before and falling 0.1 per cent month-over-month. Many expected a 0.1 per cent rise in prices.
"Indeed, the pervasive nature of the price weakness may reignite the concerns about deflation," said Millan L. B. Mulraine economics strategist at TD Securities.
He also said with deteriorating labour market conditions and the weakening domestic economy, "we expect U.S. consumer prices to weaken even further in the coming months. Nevertheless, the weakness in consumer prices is unlikely to descend into a deflationary spiral, as we expect prices to recover later this year."
Also in the U.S., the number of mortgage applications fell 11 per cent to 1,113 in the week ended April 10 from 1,250.6 the prior week. It is the first drop in mortgage applications in more than a month.
In Canada, sales of new motor vehicles fell 2.2 per cent to 115,187 units in February over the previous month, Statistics Canada reported Wednesday. The decline was "entirely a result of falling truck sales," according to the federal agency. Sales of new trucks — which include minivans, sport-utility vehicles, light and heavy trucks, vans and buses — were down five per cent in February,
Overseas, markets were mostly down Wednesday. In Europe, Switzerland's largest bank, UBS, posted a first-quarter loss of $1.74 billion U.S. and says it will cut another 11 per cent of staff this year.
London's FTSE 100 index was down 15.67 points, or 0.39 per cent to 3,973.32 at midday. Frankfurt's DAX was down 27.40 points, or 0.6 per cent to 4,529.61 and the Paris CAC was down 15.42 points, or 0.51 per cent to 2,984.80.
In Asia, Tokyo's Nikkei stock average closed down 99.72 points, or 1.13 per cent to 8,742.96 and Hong Kong's Hang Seng index closed up 89.46 points or 0.57 per cent to 15,669.62.
On Tuesday, the S&P/TSX ended the day 54 points or 0.58 per cent to 9231.62. The Dow fell 137.63 points or 1.71 per cent to 7920.18 and the Nasdaq lost 27.59 points or 1.67 per cent to 1625.72.
