PC: TSX drops sharply on weak China data, Alderon Iron Ore rallies
Toronto's main market fell sharply Friday morning despite a strong start to the first quarter earnings season, as commodity prices dropped on a disappointing reading on China's economic growth.
As of around 11:00am ET, the S&P/TSX Composite fell 128.61 points, or 1.05%, to 12,086.04, while the more junior S&P/TSX Venture Composite dropped 14.42 points, or 0.98%, to 1,458.08.
China's gross domestic product expanded by 8.1% in the first quarter, its slowest pace in three years, missing estimates with some expecting growth to have come in as high as 9%.
China's Premier warned after the release that the country continues to face a threat of inflation.
Commodities were in the red on the news, with gold for June delivery down $10.6 to $1,670.0 an ounce and crude oil for May down 60 cents to $103.04 a barrel.
Silver futures retreated more than 1.6% to $31.99 an ounce, while the base metal copper contract tanked over 2.25% to $3.64 a pound.
Canada's resource-heavy markets have been weighed down recently by China's slowing growth, which is expected to impact demand for metals and other commodities.
In Toronto on Friday, metals and mining, energy, financials and materials showed the biggest losses.
Market movers among mining companies included Cline Mining (TSE:CMK), which fell 8.6%, and First Quantum Minerals (TSE:FM), which dropped around 4.4%.
Lundin Mining (TSE:LUN) and copper-focused Teck Resources (TSE:TCK.B) retreated around 2% and 1.8%, respectively.
Gold companies Goldcorp (TSE:G) and Barrick Gold (TSE:ABX) were down 0.6% and 0.8%, respectively.
Energy stocks shed roughly 1.5% as Suncor Energy (TSE:SU) fell 1.4% and Talisman Energy (TSE:TLM) retreated over 1%. Encana (TSE:ECA) declined 1.76%.
Financials were no better, with insurers Manulife Financial (TSE:MFC) and Sun Life Financial (TSE:SLF) dropping 3.8% and 2.8%, respectively, while Royal Bank (TSE:RY) and Toronto-Dominion Bank (TSE:TD) both gave in by around 1.3%.
In Canadian corporate news, Shaw Communications (TSE:SJR.B) said Friday that fiscal second-quarter profit rose as revenues grew three percent on the back of strength in its cable and satellite units, while revenues in the media division fell.
On a per share basis, earnings remained steady at 38 cents, in line with earnings from the same quarter a year prior, and with analysts' expectations, according to Thomson Reuters.
Revenue rose three percent to $1.23 billion from $1.19 billion a year earlier.
Alderon Iron Ore (TSE:ADV) has agreed to sell a stake in itself and its Kami iron ore project in eastern Canada to Hebei Iron & Steel Group for $194 million.
The deal will give Hebei, China's top steel producer, a 19.9 percent stake in Vancouver-based Alderon, and a 25 percent interest in the Kami iron ore project, located on the Labrador-Quebec border.
Colombia and Trinidad-focused oil and gas explorer Parex Resources (TSE:PXT) saw shares plunge more than 22% Friday after lowering its 2012 guidance late yesterday as a result of recent civil disruptions at its operations and lower than expected production from Sulawesi.
Exit rate production has been reduced by 3,500 barrels of oil per day (bopd) to approximately 13,500 bopd, net before royalty.
In other news, Air Canada (TSE:AC.B) warned that airport disruptions could disrupt flights across the country all day and into the weekend. Media reports say a small group of pilots could stage a ”sick-in”.
US/Europe
US equities also fell Friday as weak economic growth data from China and a lower-than-expected consumer sentiment index overshadowed robust corporate earnings reports. The Dow was lately lower by around 0.81%.
J.P. Morgan Chase & Co. (NYSE:JPM) said Friday that first-quarter earnings fell 3.1% as legal costs and debt-related charges ate into earnings, which still beat Wall Street expectations.
For the quarter ended March 31, profits fell to $5.38 billion, or $1.31 per share, from $5.56 billion, or $1.28 per share, a year earlier. Revenue at the bank rose 6 percent to $26.7 billion from $25.2 billion.
Wall Street analysts expected J.P. Morgan to earn $1.16 per share on revenue of $24.4 billion, according to a survey by FactSet Research.
Wells Fargo & Co. (NYSE:WFC) reported Friday first-quarter earnings jumped 13 percent on stronger revenue in mortgage banking and lower delinquent loans.
Net earnings available to common shareholders for the period that ended March 31 rose 13 percent to $4.02 billion, or 75 cents per share, compared to a profit of $3.57 billion, or 67 cents per share, a year earlier.
Revenue totalled $21.6 billion, up slightly from the $20.3 billion seen in the same period last year. Analysts polled by FactSet projected earnings of 73 cents per share, on sales of $20.4 billion.
But shares of J.P. Morgan and Wells Fargo were still lower, despite the better-than-expected results. Shares of Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), which all post results next week, were also down.
Late Thursday, Google (NASDAQ:GOOG) posted a 61% jump in first-quarter earnings on slightly higher-than-expected sales, and announced a special dividend that would act as a stock split for shareholders.
The Internet search giant posted a profit of $2.89 billion, or $8.75 per share, compared with a profit of $1.8 billion, or $5.51 per share, for the year-earlier period.
Revenue grew to $10.65 billion from $8.58 billion. Adjusted earnings were $10.08 per share. Analysts were expecting a profit of $9.64 per share, on revenue of $8.1 billion, according to a consensus survey by FactSet Research.
On the economic front, the University of Michigan's Consumer Sentiment Index fell to 75.7 in April from 76.2 in March. Analysts were expecting the index to edge down to 76.1.
Meanwhile, the U.S. government reported that the Consumer Price Index, its key inflation metric, rose 0.3% in March, in line with analyst expectations.
Later Friday, Federal Reserve Chairman Ben Bernanke will speak about "Reflections on the Crisis and the Policy Response," in New York.
European markets were mixed Friday. The FTSE 100 was higher by 0.36%, while the DAX was leading the CAC 40 lower. They were down 2.51% and 2.46%, respectively.
