TSX STUMBLES AMID WEAK CHINESE DATA
The Toronto stock market added to a string of sharp losses Monday as traders continued to opt for caution amid Chinese economic data that kept concerns elevated about global economic strength and the timing of U. S. rate hikes.
The S& P/ TSX composite index closed off the lowest levels of the session, coming back from a 174- point tumble to lose 49.85 points to 14,976.92 after falling 1.55% last week.
The Canadian dollar rose US0.01¢ from Friday’s close to US89.66¢.
U. S. indexes also finished the session off the worst levels of the day with the Dow Jones industrial average down 41.93 points to 17,071.22 after losing 1% last week. Nasdaq fell 6.34 points to 4,505.85 and the S& P 500 index declined 5.05 points to 1,977.80.
TSX miners led decliners after China reported a 0.6% fall in industrial company profits in August, indicating economic growth might be declining further. Despite improved September manufacturing data, analysts said declining industrial production, lower property prices, weaker imports and pressure on factory prices are pointing to softening economic conditions.
Markets are set to exit September trading lower as investors wonder if the U. S. central bank will move before the middle of next year to raise rates from near zero, where they have been since the 2008 financial collapse. Worries about the pace of global economic growth have also made for volatility during September. However, markets have been labouring under these interest rate and economic growth worries for months.
“I don’t think a whole lot has really changed,” said David Wolf, a portfolio manager in the Global Asset Allocation group at Fidelity Investments.
“We have been worried about China for some time from a longer- term point of view. But we have also generally been of the view that the government has the tools it needs to manage the excesses in the financial and property sectors. And on the Fed side, people tend to want to see things between the lines and conspiracy theories and little nudges and winks that for the most part really aren’t there.”
September also has a reputation as the worst trading month of the year.
The TSX is down about 4% for September, led by drops in the energy and mining sectors. The showing has left the main Toronto index still up almost 10% this year.
Worries about slowing Chinese growth pushed the base metals component down 1.7% while December copper was ahead US2¢ at US$ 3.06 a pound.
The gold sector faded 1% while December bullion gained US$ 3.40 to close at US$ 1,217.50 an ounce. Financials were also weak, down 0.7% with Royal Bank of Canada down 87¢ to $ 79.57.
The energy segment gained 0.4% amid a major acquisition. Encana Corp. is buying Athlon Energy Inc. in a US$ 7.1- billion friendly takeover deal that will give the Canadian gas producer access to a major Texas oil play and speed up its shift toward more liquids production. Encana shares gained 47¢ to $ 24.06.
The November crude contract on the New York Mercantile Exchange climbed US$ 1.03 to US$ 94.57 a barrel.