The Toronto stock market moved further into negative territory for the year Monday, tumbling about two per cent as commodity prices sold off in the wake of data showing much weaker than expected economic growth in China.
The S&P/TSX index plunged 332.71 points, or 2.7%, to conclude a disastrous session at 12,004.88
The Canadian dollar weakened 1.02 cents at 97.58 cents U.S.
The world’s second-largest economy grew by 7.7% over a year earlier, down from the previous quarter’s 7.9%. That fell short of many private sector forecasts that growth would accelerate slightly to 8%.
The Chinese data helped push the May copper contract on the New York Mercantile Exchange down eight cents to $3.27 U.S. a pound, sending the base metals sector sharply lower. Sector heavyweight Teck Resources dropped $1.96, or 7%, to $26.18 while First Quantum Minerals lost $2.45, or 13.6%, to $15.54.
China has been the world’s biggest consumer of copper, which is viewed as an economic bellwether as it is used in so many applications.
The TSX gold sector was also noticeably down, further punishing a sector that was already down almost 30% year to date.
Several reasons have been cited for the drop in gold prices.
The main reason seems to revolve around speculation that Cyprus may sell a chunk of its reserves to finance its part of its financial rescue. Though that may not materialize, it has been enough to prompt some investors to think that Spain, Italy and other weak European countries might also use a gold-selling strategy.
Also, Goldman Sachs, last week lowered its average gold-price forecast for 2013 to $1,545 U.S. an ounce, a level it took out last Friday.
Barrick Gold continued to slide on the TSX. It fell $2.69, or 11.7%, to $20.25 on heavy volume of 4.4 million shares, after losing 15.5% last week, giving up its title of world’s largest gold miner by market cap, having been overtaken by Goldcorp Inc.. Goldcorp faded $1.71, or 5.7%, to $28.36.
In addition to falling gold at the end of last week, Barrick shares have been hit by a Chilean court decision to suspend its Pascua-Lama mine after indigenous communities complained that the project is threatening their water supply and polluting glaciers.
The energy sector fell as Canadian Natural Resources gave back $1.41, or 4.5%, to $29.87 while Cenovus Energy lost $1.37, or 4.5% to $29.06.
The industrials sector was also a source of major weakness, with Canadian Pacific Railway down $4.23 to $121.38.
Financials were lower with CIBC off $1.11 to $77.05.
The fall on the TSX adds to what is already a lacklustre year on the Toronto market. As of mid-afternoon Monday, the TSX was down 2.54% year to date.
On the economic front, figures released this morning by the Canadian Real Estate Association showed national home sales edged upward on a month-over-month basis in March 2013 but stayed well below levels recorded one year ago. CREA said national home sales rose 2.4% from February to March. Actual (not seasonally adjusted) activity came in 15.3% below levels in March 2012.
ON BAYSTREET
The TSX Venture Exchange plummeted 64.35 points to 958.26
All but one of the 14 Toronto subgroups were lower on the day. Metals and mining issues collapsed 10%, while gold subsided 9.1%, and materials were bruised 7.5%
Only information technology held out against this negative tide, adding 0.4%.
ON WALLSTREET
A stock selloff accelerated around 3 p.m. ET Monday, after reports flooded in about an explosion at the Boston Marathon.
The Dow Jones Industrials Average went south 265.86 points, or 1.8%, by the close to 14,599.20
The S&P 500 index subtracted 32.83 points to 1,556.02. The tech-heavy NASDAQ Composite took a header of 78.46 points to 3,216.49
CNN affiliates are reporting an explosion was heard near the finish line of the Boston Marathon and police were seen treating injured people there. By the market close, there were reports of two fatalities.
Stocks had already slumped worldwide, gold prices plunged and investors flocked to lower risk assets like U.S. Treasuries Monday. The initial sell-off began after investors awoke to news that China's economic growth had slowed in the first quarter.
Mining stocks were hit hard, with Newmont Mining, Rio Tinto, Freeport-McMoran Cooper and Gold, and Rangold Resources dropping more than 5%.
On the flipside, Citigroup had some good news. The bank reported a better-than-expected 30% jump in net income, to $3.8 billion U.S. Revenue also topped forecasts, rising 6% in the latest quarter. Citigroup shares rose 1%
Goldman Sachs, Bank of America and Morgan Stanley are on tap to report results later this week. Tech giants will also report results later this week, with Yahoo, Google and Microsoft all on deck.
In other corporate news Monday, Dish said it is bidding $25.5 billion U.S. to buy Sprint Nextel, countering an agreement between Sprint and Japan's Softbank. Sprint's stock price surged 14%.
Thermo Fisher Scientific signed an agreement to acquire Life Technologies in a deal valued at $13.6 billion U.S., plus debt. Life Technologies shares rose about 7%.
A major survey of U.S. homebuilders showed the housing recovery may have lost some of its steam in March. The news weighed on shares of homebuilders. Hovnanian, Lennar, DR Horton and Toll Brothers were all lower.
In U.S. economic news, the New York branch of the Federal Reserve released its monthly manufacturing survey showing that conditions for New York manufacturers improved slightly in April. The indexes for general business conditions and new orders remained positive, despite modest month-to-month declines.
Prices on the 10-year U.S. Treasury regained strength, lowering yields to 1.70% from Friday’s 1.72%. Treasury prices and yields move in opposite directions.
Oil prices sank $2.91 to $88.38 U.S. a barrel.
Gold prices plunged $139.70 to $1,361.70 U.S. an ounce.
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