The Toronto stock market plunged nearly 200 points Monday, adding to last week's sharp losses, amid signs that the U.S. Federal Reserve is getting ready to cut back on stimulus and more worry about China's economic rebound.
The S&P/TSX Composite Index dropped 194.02 points, or 1.6%, to greet noon at 11,801.64
Huge amounts of stimulus from central banks have played a huge role in the economic recovery since the 2008 financial collapse by keeping long-term rates low. It has also been a huge support for stock markets, including the Dow industrials which are still up year 10% year to date.
But the rally in other markets passed Toronto by and the losses Monday left the TSX falling further into negative territory for the year, leaving the main Toronto index down about 5% so far in 2013. The resource-heavy TSX has seen mining stocks mauled as commodity prices fall in a reflection of a tepid global economic performance.
The base metals sector declined, as July copper on the New York Mercantile Exchange moved closer to the three-dollar-U.S level, down another eight cents to $3.02 a pound.
Teck Resources shed $1.21 to $21.56 while First Quantum Minerals fell 93 cents to $14.69.
The gold sector was down as Goldcorp Inc. fell 95 cents to $24.65.
Elsewhere in the gold sector, slumping gold prices have resulted in Barrick Gold Corp. intensifying its downsizing plan. The miner is eliminating about 100 jobs or almost a third of its corporate staff at its headquarters in Toronto and other offices.
Barrick is also dealing with operational and regulatory issues at some of its mines and projects. Barrick shares fell 97 cents to $16.74.
Meanwhile, Goldman Sachs cut its outlook on the metal for 2013 and 2014, citing growing price risks from an improving U.S. economic picture. The bank now expects gold to end this year at $1,300 U.S. an ounce, down 9.4% on its previous forecast.
The energy sector fell while Canadian Natural Resources declined 62 cents to $28.75.
Traders also looking at what damage heavy rains and flooding will have on Alberta's energy business.
Enbridge Inc. is working to contain and clean up a weekend spill of synthetic crude into a wetland area and small lake in northern Alberta. Enbridge also shut other pipelines in the area as a precaution, including the Athabasca and Waupisoo pipelines, as the province grapples with major flooding, including in the city of Calgary where Enbridge has its head office.
Enbridge said in its initial assessment that unusually heavy rains may have resulted in a ground movement that affected the pipeline, which is part of its Athabasca network. Its shares were down $1.01 to $42.50.
The industrials sector fell as Canadian Pacific Railway gave back $3.37 to $120.73.
Bank stocks were also weak as Scotiabank stepped back 52 cents to $55.31.
ON BAYSTREET
The TSX Venture Exchange let go of 15.68 points to 880.11
All 14 Toronto subgroups remained negative, weighed mostly by metals and mining, tanking 6.2%, global base metals, sliding 4.3%, and gold, off 4.2%
ON WALLSTREET
U.S. stocks tumbled to their lowest levels in two months Monday, as persistent worries about the Federal Reserve easing up on stimulus were exacerbated by a plunge in Chinese stocks.
The Dow Jones Industrials flopped 226.20 points, or 1.5%, to 14,573.20
The S&P 500 index fell 28.43 points to 1,564. The tech-rich NASDAQ Composite dumped 57.54 points to 3,299.71
Shares of Vanguard Health Systems surged almost 70% after inking a $1.8-billion U.S. acquisition deal with Tenet Healthcare Corp.
Apple shares fell below $400 U.S. a piece for the first time since mid-April after Jefferies' Peter Misek lowered his 12-month price target to $405 from $420 U.S.
The People's Bank of China told the country's largest banks Monday to rein in risky loans and improve their balance sheets, a warning that sent a jolt through already unsettled equity markets.
Prices for the 10-year U.S. Treasury against tumbled, boosting yields to 2.59% from Friday’s 2.52%. Treasury prices and yields move in opposite directions.
Oil prices dipped 10 cents to $93.59 U.S. a barrel.
Gold prices dropped $8.40 to $1,283.20 U.S. an ounce
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