WIN: TSX racks up triple digit loss, slowing Chinese growth punishes commodity prices
TORONTO - Resource stocks pressured the Toronto stock market Friday as commodity prices retreated amid a weaker than expected reading on Chinese economic growth.
The S&P/TSX composite index lost 101.96 points to 12,112.69 while the TSX Venture Exchange fell 4.99 points to 1,467.51.
The world’s second-biggest economy saw its growth rate decline to 8.1 per cent in the three months ended in March, down from the previous quarter’s 8.9 per cent. The growth was the weakest since the second quarter of 2009.
The commodity-sensitive Canadian dollar was slightly higher despite the weak data, up 0.05 of a cent to 100.6 cents US.
U.S. markets were also negative as the Dow Jones industrials lost 51.47 points to 12,935.11.
The Nasdaq composite index declined 13.94 points to 3,041.61 and the S&P 500 index was down 5.11 points to 1,382.46.
Commodity prices backed off in the wake of the Chinese growth data.
China has been a major contributor to the global recovery from the recession that followed the 2008 financial crisis. Its huge appetite for commodities has boosted prices for oil and metals and the stocks of resource producers on the TSX.
The base metals sector led decliners, down 2.2 per cent as copper prices fell six cents to US$3.66 a pound. China is the world's biggest consumer of the metal known as an economic barometer as it is used in so many industries. Demand worries have pushed the metal down more than six per cent this month. Teck Resources (TSX:TCK.B) lost 71 cents to $36.22 while First Quantum Minerals (TSX:FM) fell 96 cents to $21.58.
Weak Chinese growth also pushed oil prices lower with the May contract on the Nymex down 25 cents to US$103.39 a barrel. The energy sector was down about one per cent as Cenovus Energy (TSX:CVE) dropped 30 cents to $34.11 and Suncor Energy (TSX:SU) gave back 50 cents to $30.45.
Bullion prices also declined as the June contract lost $10.90 to US$1,669.70 an ounce, taking the gold sector down 1.17 per cent. Goldcorp Inc. (TSX:G) faded 60 cents to $41.19 and Iamgold (TSX:IMG) eased 27 cents to $12.52.
The financial sector moved 0.5 per cent lower with Manulife Financial (TSX:MFC) down 26 cents to $13.14 and TD Bank (TSX:TD) declined 78 cents to $82.72.
Losses were spread out across all sectors save consumer staples and telecoms.
In corporate news, Air Canada (TSX:AC.B) is warning that airport disruptions could disrupt flights across the country all day and into the weekend. The alert comes as various media reports say a small group of pilots may stage a "sick-in" to express their displeasure with airline management. Its shares were off a penny to 85 cents.
Thomas Cook Canada Inc. is making an early exit from its five-year agreement with Jazz Aviation due to market conditions. The Halifax-based company says it will cease flying planes for Thomas Cook at the end of April, three years early. The Halifax-based company’s parent is traded publicly as Chorus Aviation Inc. (TSX:CHR.B) and its shares slipped a dime to $3.621.
On the earnings front, JPMorgan Chase shares were down about 0.7 per cent in pre-market trading in New York even as it reported profit of US$5.4 billion for the first three months of the year. The largest U.S. bank by assets says it earned $1.31 a share, handily beating Wall Street estimates of $1.16 per share.
Weighing on results is mortgage-related litigation: the bank set aside $2.5 billion to fight its legal battles. Its shares fell 49 cents to $44.35.
Markets had registered strong gains earlier in the week after resource giant Alcoa Inc. delivered a surprise profit and a positive outlook for aluminum prices.
Its results were especially welcome since traders expect lower profits compared with a year ago.
In Canada, Shaw Communications Inc. (TSX:SJR.B) reported its second-quarter profit rose 3.5 per cent to $178 million. The Calgary-based company’s revenue was up three per cent to $1.23 billion. Its shares fell 85 cents to $19.91.
The European debt crisis also continued to weigh on sentiment.
Other data showed that borrowing by Spanish banks from the European Central Bank jumped sharply during March. The Bank of Spain said the country’s banks nearly doubled their borrowing in March from the European Central Bank to €316.3 billion against the prior month.
Yields on 10-year Spanish government bonds surged 0.11 of a point to 5.89 per cent. Bonds were also under selling pressure in Italy, where yields on 10-year government bonds jumped 0.15 of a point to 5.47 per cent.
European bourses declined with London's FTSE 100 index down 0.51 per cent, Frankfurt's DAX lost 0.73 per cent and the Paris CAC 40 fell 1.25 per cent.
In Asia, markets mostly closed higher as traders were reassured by news that a North Korean rocket exploded soon after liftoff. South Korea’s Kospi jumped 1.1 per cent.
Mainland Chinese shares were higher as regional investors saw the GDP figures as proof that the economy would avoid a sharp slowdown and that authorities might clear further measures to boost growth. The benchmark Shanghai Composite Index edged up 0.3 per cent while the smaller Shenzhen Composite Index added 0.6 per cent.
