Oil and gold prices tumbled on Monday, dragging Canada's benchmark index with them after China reported a worse-than-expected trade deficit for February, while U.S. stocks were in a holding pattern ahead of this week's Federal Reserve meeting.
In Toronto, the S&P/TSX composite index fell 75.61 points, or 0.60%, to 12,428.01. Five of the 10 sub-indexes also declined, led by materials, down 1.35%, health care, which was off by 1.33%, and energy, down 1.28%.
The price of crude oil dropped $1.06 to US$106.34 a barrel in New York on Monday, while gold fell $11.70 to US$1,699.80 an ounce. Those declines were reflected in the share prices of energy companies such as Canadian Natural Resources, which dropped 3.13% to $34.40 and Suncor, down 3.07% to $33.19; and metals producers such as Goldcorp, which dipped 1.39% to $46.25. Teck Resources saw its share price slip 2.85% to $35.49 as the price of copper fell.
"China's trade balance swung to a record $31.5-billion deficit in February, as the gain in imports (+39.6%) more than doubled the rise in exports (+18.4%)," BMO Capital Markets economist Benjamin Reitzes said in a note Monday.
The soft export figure reinforces "the view of slowing global economic momentum. Weakness in Europe and generally sluggish developed economy demand are weighing on Chinese exporters. The trade figures, taken with slowing inflation, retail sales and industrial production, suggest that another reserve requirement cut or an interest rate cut could come within the next month or two."
The Canadian dollar fell 18 basis points to US$1.0074 on Monday.
"The Canadian dollar has been consistently weakening in sympathy with the commodity currencies after a disappointment in the Chinese data," Stewart Hall, senior currency strategist at Royal Bank of Canada's RBC Capital unit, told Bloomberg.
Markets in the U.S. were mixed on Monday, but overall seemed to be in a holding pattern. While the interest rate announcement is not expected to hold any surprises - the Fed has committed to holding its overnight rate at its current levels into next year - "the street will likely focus on the commentary more than usual for indications on the potential for additional quantitative easing in light of the strengthening U.S. economy and employment situation," said analyst Colin Cieszynski of CMC Markets.
The Dow Jones industrial average rose 37.69 points, or 0.29%, to 12,959.71 on Monday, while the Nasdaq composite was just below flat with a dip of 4.68 points, or 0.16%, to 2,983.66.
Canada's junior Venture exchange slipped 13.71 points, or 0.83%, to 1,636.10.
