The Toronto stock market lost more than 300 points in morning trading Thursday as commodity prices fell amid reports from three of the world’s largest economies showing a slowdown in manufacturing.
The S&P/TSX Composite Index plummeted 351.02 points, or 3%, to end Thursday at 11,408.32
The Canadian dollar was down 1.03 to 97.16 cents U.S.
For the third time since 2008, the government announced stricter mortgage regulations, to be implemented July 9.
Among the changes made, the Department of Finance lowered the refinancing ceiling to 80% from 85%, and narrowed the maximum amortization period to 25 years.
Moreover, homes priced costing greater than $1 million will no longer qualify for insured mortgages. Mortgage payments and the total debt service ratio will also be capped.
Canada’s efforts to cool the housing market pressured shares of lenders as the financial sector fell. Royal Bank of Canada slipped $1.68, or 3.2%, to $51.37.
CIBC said it will wind up operations at its FirstLine Mortgage business after it failed to find an acceptable buyer. The big Canadian bank said Wednesday that it couldn’t find an acceptable deal after trying since March to shop its FirstLine mortgage-broker unit. Shares fell $1.20, or 1.7%, to $71.62.
Commodities futures weakened in New York, dragged down following a lackluster Chinese manufacturing survey reported overnight.
Gold stocks also struggled, pressured by Centerra Gold, falling $1.03, or 8%, to $11.84, and New Gold Inc., losing 55 cents, or 5.4%, to $9.61.
In corporate news, Encana Corp. will invest an additional $600 million this year — on top of its original $2.9-billion budget — to increase significantly production of valuable liquids-rich natural gas amid a prolonged downturn in the price of so-called dry gas. Stock in the company fell 7.7%, or $1.70, to $20.43.
Alimentation Couche-Tard says it is looking at expanding Statoil Fuel & Retail’s reach to new markets in Europe after its purchase of the Norwegian company elicited interest from other oil brands. Couche-Tard shares reversed course and improved 51 cents, or 1.2%, at $45.00.
On matters economic, Statistics Canada said this morning that retail sales swooned 0.5% in April. In volume terms, retail sales decreased 0.8%, the third decline in four months.
On the brighter side, those receiving regular Employment Insurance benefits decreased for the third straight month in April, down 28,600, or 5.3%, to 513,700.
ON BAYSTREET
The TSX Venture Exchange collapsed 38.17 points to 1,216.40. The Nasdaq Canada index slid 14.70 points to 362.59
All 14 Toronto subgroups were negative on the day, led downward by energy, off 5.3%. Metals and mining issues fell 5.2%, and global base metals were punished 4.5%.
ON WALLSTREET
A stock selloff gained steam Thursday, with the Dow sinking more than 200 points, as investor confidence was shattered by signs that the global economy may be hitting a rough patch.
Investors got one more source of worry ahead of the close, as new reports said that Moody's is expected to downgrade global banks Thursday.
Goldman Sachs had already sounded alarm bells over the health of the stock market late Thursday morning when it issued a report telling investors to short, or sell, the S&P 500 until it falls at least 5% below current levels.
Add an audit of Spanish banks that showed the government plans to request up to €62 billion of aid for the ailing nation's banks and it was the perfect storm to send all three major indexes down nearly 2%.
The Dow Jones Industrials got walloped 250.82 points, or 2%, to close at 12,573.60
The S&P 500 tumbled 31.25 points, at 1,324.44. The Nasdaq Composite Index hurtled earthward 71.36 points to 2,859.09
Commodity-related stocks took a big hit, with shares of Exxon Mobil, Chevron and Alcoa among the Dow's biggest decliners.
Shares of drugstore chain Rite Aid rose after it reported a loss of three cents U.S. a share, a bit better than the forecast of four cents U.S. a share from analysts surveyed by Thomson Reuters, or the seven cents U.S. a share it lost a year earlier.
Shares of Bed Bath & Beyond sank more than 16% after the retailer offered disappointing guidance for the current quarter after Wednesday's close.
Shares of open-source software provider Red Hat fell after it posted a better-than-forecast gain in earnings late Wednesday, but reported disappointing billings for the quarter.
Food maker ConAgra posted a better-than-expected increase in operating earnings, pushing shares higher. The company said fiscal-year profit would also rise more than current forecasts. But a charge related to its pension plans resulted in it reporting a net loss.
Cigarette maker Philip Morris International, which sells the brands of Altria Group such as Marlboro in overseas markets, cut its full-year earnings guidance, citing a bigger hit from currency exchange rates.
Dow component Johnson & Johnson is close to settling a probe with the Justice Department into the company's promotion of the antipsychotic drug Risperdal, which could include a payment of $1.5 billion U.S, according to a report in the Wall Street Journal.
The payment would be the largest ever for the company, according to the report, but it would avoid a felony charge that could prevent the company from selling its medicines to government health programs such as Medicare. Shares of J&J were down.
Overseas economic reports released Thursday show it's not just the U.S. where the economy is weaker than hoped.
That came on the heels of a Wednesday announcement by the Federal Reserve that it would continue helping the market, though not doing as much as many investors had hoped.
The Fed said Wednesday that it will extend Twist -- its policy of swapping short-term Treasuries in its portfolio for debt with a longer duration -- until the end of the year, in an effort to jumpstart sluggish economic growth and hiring. The Fed said it stood ready to take additional action if needed.
Economic weakness has moved around the globe. Chinese manufacturing fell to a seven-month low -- a sign that factories there are being hit by sluggish demand, according to the preliminary report of HSBC Manufacturing Purchasing Managers' Index.
Meanwhile, Europe's PMI index for June remained near a three-year low, as manufacturing output in Germany -- the most important European economy -- fell at the fastest rate in three years. It was the second straight month of decline.
Economically speaking, there were 387,000 first-time filings for unemployment benefits in the week ended June 16, little changed from the prior week but a bit above the forecast of 380,000 from the economists surveyed by Briefing.com.
Existing home sales for May came in slightly below expectations at an annualized rate of 4.55 million, according to the National Association of Realtors.
The Conference Board's Leading Economic Indicators index for May came in higher than expected, increasing 0.3%, after decreasing by 0.1% in April.
The Philadelphia Fed's manufacturing index indicated a steep decline of 16.6%, which was significantly worse than the 0.2% drop that economists predicted. A month ago that drop was 5.8%.
The price on the benchmark 10-year U.S. Treasury moved up a bit, lowering yields to 1.62% from Wednesday’s 1.64%. Treasury prices and yields move in opposite directions.
The price of a barrel of oil fell $2.90 to $78.55 U.S.
Gold futures for August delivery dropped $47.10 to $1,568.50 U.S. an ounce.
