The Toronto stock market was deep into negative territory Tuesday as European government debt worries pushed the U.S. dollar higher and commodity prices sharply lower.
The S&P TSX Composite Index closed Tuesday down 133.18 points, or 1.1%, to 12,602.20.
The Canadian dollar moved lower against the American currency, losing 1.1 cents to 97.90 cents U.S.
Resource stocks led the selloff as investors also fretted over likely moves to slow the Chinese economy.
Markets have been depressed over the past week on concerns that Chinese monetary authorities will be raising interest rates to cool a property boom and dampen inflationary pressures. Strong demand for oil and metals from China and a weaker U.S. dollar for much of 2010 have driven up commodity prices.
Investors are also waiting to see if Ireland relents and requests a financial aid package at a meeting of eurozone finance ministers.
Although the Irish government has been saying it doesn’t need any money as it's fully funded until the middle of next year, there’s mounting pressure on Dublin to agree to a rescue deal amid worrying signs that Europe’s debt crisis will create a domino effect.
Portugal is widely considered to be next in the line of fire.
Meanwhile, the European Union’s monetary chief says Ireland’s debt crisis is all about its troubled banks and that the shared euro currency is not in danger
A combination of a stronger U.S. dollar and demand concerns pushed the December crude contract on the New York Mercantile Exchange down. Among energy stocks, Suncor Energy lost 78 cents to $33.64 while Canadian Natural Resources was down 88 cents to $38.67.
The base metals sector fell as metal prices also backed off with the December copper contract on the Nymex down 20 cents to $3.72 U.S. a pound. Teck Resources declined $1.20 to $48.16 while Lundin Mining Corp. lost 20 cents to $6.39.
In the gold sector, Kinross Gold Corp. faded 34 cents to $17.80 while Goldcorp Inc. stepped back 39 cents to $45.97.
Most sectors contributed to TSX weakness with the financial sector down one per cent. Scotiabank gave back 32 cents to $52.63 while TD Bank shed 36 cents to $72.84.
Shareholders with Australian grain producer AWB Ltd. have voted 80% in favour of a takeover by Canadian fertilizer maker Agrium Inc. An application will be made for court approval on Wednesday, and if approved, the $1.1-billion transaction should be completed by Dec. 3. Agrium shares actually gained 12 cents to $80.13.
Sears Canada Inc. shares fell 67 cents to $19.68 after it reported that third-quarter revenue and same-store sales fell by 8.2% from a year ago. Total revenue was $1.2 billion, down from $1.3 billion, while net income dropped to $18.5 million from $47.1 million.
In macroeconomic news, StatsCan said today that factory sales fell less than expected in September, with the biggest declines seen in the transportation equipment sector. Sales were down 0.6% to $45.1 billion for the month, the federal agency said. On average, economists had expected sales to decline by 0.9% in September.
ON BAYSTREET
The TSX/Venture Exchange plummeted 59.31 points to 1,922.87, while the Nasdaq Canada index declined 18.26 points to 693.63.
In Toronto, all but one of the 14 subgroups stayed in negative territory all day. The metals and mining stumbled 3.1%, while global base metals fell 1.5% and energy stocks listed lower by 1.8%.
Only a slight 0.5% rally by telecoms pierced the gloom.
ON WALLSTREET
In New York, stocks tumbled Tuesday, with all three major indexes down substantially as investors cast a worried eye at economic developments in Europe and China.
The Dow Jones Industrials dumped 178.47 points, or 1.6%, to close at 11,023.50, with Alcoa and Travelers Companies leading the blue chip index's decline. Earlier in the session, the Dow fell more than 200 points.
The S&P 500 gave back 19.41 to 1,178.34. The tech-rich Nasdaq Composite Index surrendered 43.98 points to 2,469.84.
The Dow and the S&P posted the biggest one-day losses since Aug. 11 and Aug. 19, respectively. The Nasdaq's drop was the largest since Oct. 19.
The day's selloff also puts all three indexes on track to decline for the month of November, erasing the gains logged after the Republican victory in the midterm elections and the Federal Reserve's announcement to pump $600 billion in to the economy.
Traders on Wall Street have been holding back on buying recently, as they await more clarity on the economic outlook for the United States, Europe and China.
As a result, investors have been taking their cues from daily economic indicators, and have been keeping a close eye on debt auctions in fiscally challenged countries such as Ireland.
General Motors announced an increase in the target price and size of its initial public offering. The target share price for common stock moved to $32 to $33 U.S. from its previous estimate of between $26 and $29 U.S. per share. As a result, the total size of GM's IPO is now expected to be close to $16 billion U.S.
Exxon Mobil fell more than 2% Tuesday and was among the biggest losers in the Dow. Southwest Energy Co., Anadarko Petroleum, Massey Energy Company, Peabody Energy, NRG Energy Inc. and Jacobs Energy Group all shed about 3%, while Consol Energy dropped more than 5%. They were among the biggest laggards on the S&P 500.
Meanwhile, retail stocks moved higher after major players posted healthy profits and strong forecasts for the fourth quarter, which includes the all-important holiday shopping period, with Wal-Mart, Home Depot and Urban Outfitters leading the advance.
Stocks ended mixed Monday, after an early advance on merger news gave way to jitters about the economy.
Wal-Mart, the world's largest retailer, reported earnings per share of 95 cents U.S. Excluding charges, Wal-Mart met forecasts. But the retailer missed on sales, reporting net sales of $101.2 billion versus forecasts of $102.3 billion U.S. Wal-Mart also hiked its outlook for the year. Shares rose about 1%.
Home Depot reported third-quarter earnings of 51 cents U.S. per share, topping forecasts by three cents. But the home improvement company lowered its full-year sales outlook. Shares of Home Depot jumped nearly 2%.
Clothing retailer Abercrombie & Fitch announced third-quarter earnings per share of 56 cents U.S., topping analyst expectations by five cents U.S. per share. Shares were down 1.6%.
Economically speaking, a government report on the latest Producer Price Index was delivered before the bell. The report is considered an important reading on the price of goods at the wholesale level.
Producer prices rose 0.4% in October, matching the growth rate for the previous two months, but falling short of analyst expectations. The measure had been forecast to have risen 0.8% for October, according to a consensus of economists surveyed by Briefing.com.
Excluding energy prices, the so-called core PPI decreased by 0.6%. It had been expected to be flat at 0.1%.
Economists expect industrial production rose 0.3% in October, after a 0.2% decline in output the month before, according to the consensus estimate from Briefing.com.
The price on the benchmark 10-year U.S. Treasury rallied, pushing the yield down to 2.85% from 2.91% late Monday. Treasury prices and yields move in opposite directions.
Oil was off $2.60 a barrel in price to $82.26 U.S. The price of an ounce of gold regained 38 cents to $1,341.65 U.S.
