A new round of worry about the Chinese economy and uncertainty about the impact of big U.S. government spending cuts pushed the Toronto stock market lower Monday.
The S&P/TSX composite index dropped 65.71 points to end Monday’s session at 12,707.41
The Canadian dollar slipped 0.04 cents at 97.30 cents U.S., two days before the Bank of Canada makes its next announcement on interest rates. The bank could signal that interest rate hikes are even further down the road than thought because of persistent economic weakness.
The base metals sector declined, as May copper gave up early gains in the wake of the Chinese data and was unchanged at $3.50 U.S.
China is the world’s biggest consumer of copper. Teck Resources declined 85 cents to $30.26.
There was also major acquisition activity in the resource sector.
Aurizon Mines Ltd. has received a friendly $796-million takeover offer from U.S.-based silver, gold and metals producer Hecla Mining Co. Hecla’s offer values the Vancouver-based miner at $4.75 per share, 40 cents per share above Aurizon’s closing stock price on Friday. Aurizon shares gained 14 cents to $4.49.
The gold sector also fell as Barrick Gold Corp. was down 80 cents to $29.40.
The energy sector was down while Canadian Natural Resources dropped 71 cents to $31.34.
Gains were led by defensive sectors such as consumer staples and convenience store chain Alimentation Couche Tard gained 43 cents to $53.28.
Telecoms were also positive as Rogers Communications advanced 17 cents to $49.22.
In other corporate developments, Bank of Montreal was off 26 cents to $63.82 after it lowered its posted rate for a five-year fixed mortgage to 2.99% from the current 3.09%.
The move prior to the major spring buying season comes after Canada Mortgage and Housing Corp. warned of a slowdown in the housing sector, saying new housing construction is expected to be lower this year due to moderate economic and employment growth.
There are plenty of major economic data coming down this week.
On Friday, Statistics Canada releases the February jobs report.
Economists anticipate job creation for February to come in at 8,000 after a plunge of 22,000 positions during January, with the jobless rate edging up 0.1 of a point to 7.1%.
ON BAYSTREET
The TSX Venture Exchange faded 22.92 points to 1,097.17
Eight of the 14 Toronto subgroups were lower on the day, weighed down mostly by the gold and metals and mining group, taking a twin bruising of 2.7% each, while materials skidded 2.5%.
The five gainers were led by industrials and consumer discretionaries, each up 0.6%, while health-care improved 0.5% and the real-estate group was flat.
ON WALLSTREET
U.S. stocks drifted higher late Monday as investors took federal spending cuts in the United States in stride.
The Dow erased earlier losses to gain 38.16 points, and end the day at 14,127.80.
The S&P 500 index picked up 7.03 points to 1,525.23. The tech-heavy NASDAQ Composite recovered 12.29 points to 3,182.03.
In the United States, shares of companies that are exposed to China were among the worst performers. Caterpillar, Alcoa and United Technologies were all down.
There was little in the way of corporate news Monday. But shares of Apple continued to slide, hitting another 52-week low. The stock is now down 20% so far this year. Meanwhile, Apple rival Google rose about 1% and hit a new all-time high in the process.
It appears investors have become increasingly convinced that federal spending cuts would go into effect after budget talks in Washington broke down last week.
While the cuts could be a drag on economic growth, investors believe they are at least a step towards dealing with the nation's fiscal crisis
Some analysts fear that the $85 billion U.S. in cuts, which will not be felt immediately, could take a big bite out of economic growth this year. But many investors are hopeful that lawmakers will eventually replace the arbitrary, across-the-board cuts with something more targeted.
Chinese stocks tumbled Monday, as the government in Beijing announced new measures to avert a real estate bubble.
Prices on the 10-year U.S. Treasury hesitated a bit, raising yields to 1.88% from Friday’s 1.85%. Treasury prices and yields move in opposite directions.
Oil prices slipped 72 cents to $89.96 U.S. a barrel.
Gold prices fell back 60 cents to $1,571.70 U.S. an ounce.
