TH: TSX little changed amid worries about slowing economic momentum
TORONTO—The Toronto stock market was little changed early Tuesday amid worries that economic momentum is faltering in the United States and China.
The S&P/TSX composite index rose 12.01 points to 12,030.51 after four straight trading days of losses while the TSX Venture Exchange was off 2.91 points to 1,451.56.
The Canadian dollar lost 0.29 of a cent to 100.06 cents US as demand concerns pushed oil prices lower for a second day.
U.S. markets were generally weak with the Dow Jones industrials down 8.86 points to 12,920.73.
The Nasdaq composite index gained 7.3 points to 3,054.38, while the S&P 500 index added 0.66 of a point to 1,382.86.
North American markets finished in the red Monday as traders reacted to Friday’s release of U.S. jobs data showing the United States created only 120,000 jobs last month, far less than the approximately 200,000 that economists expected. The disappointing showing followed three straight months where the American economy cranked out at least 200,000 jobs.
Slower growth in China was in focus Tuesday after the world’s second-biggest economy returned to a trade surplus in March but growth in exports and imports was weak.
China’s exports rose 8.9 per cent over a year earlier to US$165.6 billion, while imports grew 5.3 per cent to $160.3 billion, well below China’s growth levels in recent years.
Double-digit economic growth in China has been key to lifting the global economy from the sharp economic slowdown that followed the 2008 financial crisis. And strong demand for commodities has lifted prices for oil and metals and energy and mining stocks on the resource-heavy TSX.
But Chinese demand has weakened following government controls imposed to cool inflation and steer growth to a more sustainable level.
The latest reading on Chinese economic growth comes out on Friday.
China’s flagging demand is a bad sign for Canadian, Australian, Brazilian and Asian economies that count on Chinese customers to buy oil, copper, iron ore and industrial components.
Economic worries have driven the TSX lower for the past five weeks, leaving the main index up less than 100 points so far this year.
The base metals sector led advancers, up one per cent while copper prices were unchanged at $3.74 a pound after falling almost five per cent over the past week. The metal is widely viewed as an economic barometer as copper is used in so many industries. Teck Resources climbed 40 cents to $34.85.
The tech sector provided lift as Research In Motion Ltd. ran ahead 22 cents to $13.20.
Bullion moved higher while the June contract rose $2.20 to US$1,646.10 an ounce and the gold sector was ahead 0.4 per cent. Barrick Gold Corp. rose 34 cents to $41.14.
The energy sector was slightly higher as oil prices fell below $102 a barrel Tuesday as weaker economic growth raised the prospect that crude demand will remain tepid. Suncor Energy gained 22 cents to $30.53.
The May crude contract on the New York Mercantile Exchange lost 55 cents to US$101.91 a barrel.
Telecom and industrial stocks were the major decliners with BCE Inc. down 31 cents to $39.75 while Canadian National Railways gave back 55 cents to 77.16.
Traders also looked forward to the start of the first quarter corporate earnings season with some trepidation.
After a series of gains, hopes for a strong quarter have been dimmed amid lower estimates and guarded forecasts.
Alcoa Inc. kicks off earnings after the close and the aluminum manufacturer is expected to post a loss of three cents per share. In the year-earlier quarter, Alcoa reported a profit of US$308 million, or 27 cents per share.
Alcoa’s report should provide insight into how the aluminum industry is coping with a glut of supply, weaker prices and higher costs. Alcoa shares were off five cents to US$9.55, well off its 52-week high of $18.19.
The European debt crisis also hovered in the background as Spain’s bond yields on international markets rose despite expectations of a new round of austerity measures.
The yield on 10-year Spanish bonds in the secondary market rose to 5.81 per cent from 5.74 per cent late last week. The difference between Spain’s yield and that of the benchmark German bund was 4.11 percentage points, the highest since the new government took power in December.
European indexes were lower as traders got their first opportunity to react to the American jobs data after the long Easter weekend.
London’s FTSE 100 index lost 0.88 per cent, Frankfurt’s DAX was down 0.94 per cent and the Paris CAC 40 fell 1.78 per cent.
Asian markets were mixed as Tokyo’s Nikkei 225 index slipped 0.1 per cent and Hong Kong’s Hang Seng fell 1.1 per cent. China’s benchmark Shanghai Composite Index rose 0.9 per cent and South Korea’s Kospi shed 0.1 per cent.
In corporate news, Sony Corp. more than doubled its projected annual loss to 520 billion yen (US$6.4 billion), its worst red ink ever, due to a massive tax charge. The additional 300 billion yen non-cash charge stemmed from revaluing U.S. tax assets that are unlikely to be utilized due to its string of annual losses.
In February, it had projected an annual net loss of 220 billion yen amid weak TV sales, the strong yen and production disruptions from flooding in Thailand.
