Resource stocks led the way to a sharply lower session on the Toronto stock market Monday as commodity prices tumbled in the wake of data showing much weaker than expected economic growth in China.
The S&P/TSX index plunged 232.75 points, or 1.9%, to greet noon at 12,104.84
The Canadian dollar weakened 0.62 cents at 97.98 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 11 cents to $3.24 U.S. a pound, sending the base metals sector way down. Sector heavyweight Teck Resources dropped $2.82 to $25.32 while First Quantum Minerals lost $1.75 to $16.24.
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 down substantially, further punishing a sector that was already down almost 30% year to date.
Barrick Gold continued to slide on the TSX. It fell $2.52, or 11%, to $20.42 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., whose faded $1.81 to $28.26.
In addition to falling gold at the end of the week, Barrick shares dropped heavily earlier in the week after a Chilean court suspended its Pascua-Lama mine after indigenous communities complained that the project is threatening their water supply and polluting glaciers.
The energy sector fell with Canadian Natural Resources giving back $1.07 to $30.21 while Cenovus Energy lost $1.06 to $29.37.
The industrials sector was also a source of major weakness, down with Canadian Pacific Railway down $1.31 to $124.30.
The TSX found some relief from positive showings in the telecom and tech sectors.
The fall on the TSX adds to what is already a lacklustre year on the TSX. As of mid-morning Monday, the TSX was down 2.5% year to date.
The Dow industrials and S&P 500 have been smashing one record after another, with the Dow ending last week 2% higher year to date while the S&P was ahead 12%.
In corporate news, Gluskin Sheff + Associates Inc. said Monday that its board and management have reviewed ways to maximize its value but concluded that it will continue in the current form at this time.
The Toronto-based investment management firm’s stock had been halted prior to the announcement, which followed a news report that it had been entertaining takeover offers. Its shares slipped $1.10 to $17.85.
Centrica PLC of Britain and Qatar Petroleum International will pay about $1 billion cash to acquire a majority of Suncor Energy’s conventional natural gas and crude oil assets in three western provinces.
Suncor says the deal excludes the majority of its unconventional natural gas properties in the Montney region of British Columbia and its Wilson Creek unconventional oil assets in Alberta. Suncor shares shed $1.04 to $27.78.
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 57.87 points to 964.74
All but two of the 14 Toronto subgroups were lower by midday, weighed mostly by metals and mining stocks, down 7.9%, while gold issues faded 7.8% and materials shed 6.6% of their strength.
The two stalwarts were telecoms, up 0.7%, and information technology stocks, up 0.4%.
ON WALLSTREET
Stocks around the globe sold off, gold prices plunged, and investors sought safety in U.S. Treasuries.
The Dow Jones Industrials Average descended 122.57 points by noon time to 14,742.50
The S&P 500 index fell 17.89 points to 1,570.96. The tech-heavy NASDAQ Composite moved down 39.76 points to 3,255.18
The selloff in gold spilled over to mining stocks. Shares of Newmont Mining, Rio Tinto, Freeport-McMoran Cooper and Gold, and Rangold Resources dropped more than 5%. Popular gold ETF SPDR Gold Trust fell 5%.
On the flipside, good news came from Citigroup, after 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 3% in morning trading.
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 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 15.8% in morning trading.
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 8% and Thermo Fisher rose 4%.
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 gave up some ground, lifting yields to 1.73% from Friday’s 1.72%. Treasury prices and yields move in opposite directions.
Oil prices sank $2.56 to $88.73 U.S. a barrel.
Gold prices plunged $126.60 to $1,374.80 U.S. an ounce.
