North American markets drifted lower Thursday amid a plunge in Japanese markets and data that showed a contraction in Chinese manufacturing.
The S&P/TSX composite index was negative 94.41 points, to end Thursday at 12,658.09
The Canadian dollar regained 0.69 cents to 97.14 cents U.S.
Japan's Nikkei index fell 7.3% to 14,483.93 -- its largest slide since Japan was hit by a devastating tsunami more than two years ago, that was also partly blamed on a spike in Japanese government bond yields.
Weaker-than-expected Chinese manufacturing data also resulted in concerns in the markets over future commodities outlook.
HSBC said its preliminary Purchasing Managers Index fell to a seven-month low of 49.6 in May from April's 50.4. Numbers below 50 indicate that activity is contracting. Analysts had expected a more modest decline to 50.3.
In corporate news, earnings season for Canada's major banks was kicked off Thursday with TD Bank Group.
The bank reported before markets opened that it had a "solid" second quarter, with growth in most of its major sectors, but came up short of analyst estimates.
Its net income was up 2% from a year ago $1.723 billion or $1.78 per share while its adjusted earnings were $1.8 billion, or $1.90 per common share.
While the adjusted earnings were up 6% from a year ago, they were just short of a consensus estimate of $1.91 per share compiled by Thomson Reuters. Net income, which is less closely watched by analysts, also missed. The bank's shares dropped 1.2%, or $1.04, to $83.
The gold sector was one of only gainers among the TSX subgroups, as Belo Sun Mining spiked 5.8% to 55 cents, and Kirkland Lake Gold jumped 4.7% to $4.42.
Metals stocks took the brunt of the negative readings Thursday morning, Teck Resources taking the worst beating, 4.3%, to $28.18, while Rio Alto Mining lost 4.2% to $2.95.
Among real estate issues – another major losing group – Brookfield Asset Management shares took a 3% tumble to $37.62. First Capital Realty gave back 0.3% to $19.78.
On the economic slate, Statistics Canada reported that those of us on employment insurance decreased 5,200, or 1%, in March to 523,700. It was the fifth straight drop. StatsCan also says compared with a year earlier, the number of beneficiaries was down 8.1%.
ON BAYSTREET
The TSX Venture Exchange surged to within 0.03 points of breakeven to 942.05
All but one of the 14 Toronto subgroups remained in the red by the close, weighed by metals and mining, tumbling 2.9%, global base metals, down 2.3%, and real-estate, off 1.2%.
The lone holdout against the negative tide was gold, brightening but 0.4%.
ON WALLSTREET
U.S. stocks pared most of the morning's losses Thursday as investors discounted concerns about the Federal Reserve curtailing its bond buying program.
The Dow Jones Industrials slid 12.67 points to close at 15,294.50, after having slumped as much as 100 on the day.
The S&P 500 index was down 4.65 points to 1,650.70. The tech-rich NASDAQ Composite fell 3.88 points to 3,459.42
The biggest standout was Dow component Hewlett-Packard. Shares of the PC maker rallied 14%, a day after the company's earnings beat estimates and CEO Meg Whitman said she was "encouraged" by the turnaround plan.
Shares of Ralph Lauren slumped after the retailer failed to meet lowered revenue forecasts, even as earnings jumped 35%.
Meanwhile, discount retailer Dollar Tree reported better than expected earnings, sending shares up nearly 4%.
Gap and Sears Holdings are up after the bell.
Shares of Tesla nudged higher, a day after the electric car maker announced that it had repaid a $465-million U.S. loan from the government nearly a decade before it was scheduled to do so.
Economically speaking, data showed that U.S. weekly jobless claims dropped by 23,000 to 340,000 in the week ended May 18, keeping the level of initial claims in a range consistent with modest job growth.
In addition, the Federal Housing Finance Agency released its home-price report for March, saying U.S. home prices rose a seasonally-adjusted 1.3% in March.
Markit also said its flash manufacturing purchasing managers for May fell to 51.9, its lowest reading since October, though the agency’s overall report was mixed.
Prices for the 10-year U.S. Treasury gained ground, driving yields down to 2.02% from Wednesday’s 2.03%. Treasury prices and yields move in opposite directions.
Oil prices inched forward seven cents to $94.35 U.S. a barrel.
Gold prices gained $22.30 at $1,389.70 U.S. an ounce
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