The Toronto stock market headed for its biggest decline since early April on Thursday following a disappointing read on Chinese manufacturing and the U.S. Federal Reserve's latest indication it's preparing to wind down economic stimulus.
The S&P/TSX Composite Index ditched 299.72 points, or 2.4%, to conclude Thursday at 11,968.57, the biggest one-day drop since the index fell nearly 260 points on April 3.
The Canadian dollar skidded 0.9 cents to 96.45 cents U.S., amid a sharp retracement in commodity prices after a bigger contraction this month in China's manufacturing sector.
HSBC said that the preliminary version of its monthly purchasing managers’ index for China fell to a nine-month low of 48.3 in June, down from 49.6 in May. Numbers below 50 indicate a contraction in the manufacturing sector.
The base metals sector stumbled while July copper on the New York Mercantile Exchange lost eight cents to $3.06 U.S. a pound.
Teck Resources fell 53 cents to $22.57 while HudBay Minerals dropped 50 cents to $7.09.
The gold sector was also down substantially while bullion tumbled, falling below $1,300 U.S. for the first time in nearly three years. Aggressive monetary stimulus programs by central banks have supported gold prices since the 2008 financial crisis and subsequent recession, partly because of worries about inflation.
But prices have eroded as inflation remains tame and the global economic outlook continues to improve.
Goldcorp Inc. faded $2.12, or 7.9%, to $24.81 while Barrick Gold Corp. declined $1.45, or 7.8%, to $17.10.
The July crude contract also fell hard, pushing the energy sector down as Suncor Energy gave back 68 cents to $30.83.
The utilities sector declined while TransAlta Corp. declined 48 cents, or 3.6%, to $12.91.
The telecom sector shed much of its strength and BCE Inc. was down 97 cents to $43.15.
Bank stocks also contributed to the dismal showing on the TSX with Royal Bank down $1.77 to $58.92.
On the economic track, Statistics Canada reported that the number of people receiving regular Employment Insurance benefits in April was virtually unchanged at 521,600. Compared with a year earlier, the number of beneficiaries in April was down 4.7%.
ON BAYSTREET
The TSX Venture Exchange swooned 31.77 points to 892.48
All 14 Toronto subgroups stayed negative, weighed mostly by gold, down 7.3%, materials, skidding 5.6%, and the metals and mining group, dipping 4.9%.
ON WALLSTREET
Wall Street endured its worst day of the year Thursday, one day after U.S. Federal Reserve chairman Ben Bernanke raised fears the central bank is preparing to begin winding down its stimulus policies.
The Dow Jones Industrials collapsed 353.87 points, or 2.3%, to 14,758.30, its biggest one-day decline since November. Including Wednesday's losses, the Dow has erased more than 500 points in two days.
The S&P 500 index fell 40.53 points – its worst one-day fall in two years -- to 1,588.40. The tech-rich NASDAQ Composite dumped 78.57 points to 3,364.64
Depending on how the economy performs, Bernanke said the Fed could begin tapering its bond buying later this year and end the program some time in 2014.
At the same time, he stressed that if economic growth or hiring fall short of the central bank's outlook, the Fed would adjust its policies.
While this is what most economists had predicted, investors seemed surprised to hear Bernanke spell it out in such detail.
On the corporate front, drugstore chain Rite Aid swung to a profit but revenue declined in the latest quarter. Its stock plunged 7.6% to $2.88 U.S.
Tech giant Oracle backtracked 2.6% late in the afternoon to $33.20 U.S.
The sharp drop in gold prices weighed on shares of mining companies, including Newmont Mining and Freeport-McMoRan
In economic news, the government said the number of jobless claims rose more than expected in the latest week. A measure of manufacturing activity in the Philadelphia area surged to a two-year high in June.
Meanwhile, the National Association of Realtors said existing home sales in May rose 4.2% to an annual rate of 5.18 million, slightly better than expected.
Despite the housing data, shares of home builders were among the worst performers. Toll Brothers, D.R. Horton and Lennar were all down sharply.
Prices for the 10-year U.S. Treasury fell, boosting yields to 2.42% from Wednesday’s 2.31%. Treasury prices and yields move in opposite directions.
Oil prices dropped $3.30 to $94.94 U.S. a barrel.
Gold prices collapsed $95.30 to $1,293.80 U.S. an ounce
