Financial, resource shares scupper TSX
TORON TO • The Toronto stock market has started the 2014 trading year in the red in the wake of manufacturing data that indicated the sector is still growing but at a slower pace.
The S&P/TSX composite index closed down 27.36 points at 13,594.19 on Thursday. The Canadian dollar lost early momentum as the U.S. dollar gained against other currencies and was down US0.33¢ at US93.69¢.
U.S. losses were steeper as investors stepped back following strong double-digit gains in 2013 despite further evidence that U.S. layoffs are low and hiring will likely remain steady. The Labor Department said the number of Americans seeking unemployment benefits dipped 2,000 last week to a seasonally adjusted 339,000.
Applications are a proxy for layoffs and appear to have stabilized near pre-recession levels at a level consistent with solid hiring.
The Dow Jones industrial average dropped 135.31 points to 16,441.35, Nasdaq declined 33.52 points to 4,143.07 and the S&P 500 index was down 16.38 points at 1,831.98.
The Institute for Supply Management’s latest reading on the U.S. manufacturing sector showed slowing expansion, with its index coming in at 57 for December, down slightly from 57.3 in November. That reading met expectations.
Royal Bank of Canada’s Canadian manufacturing purchasing managers’ index also showed the manufacturing sector growing, also at a slower pace. It came in at 53.5 for December, down from 55.3 in November.
And two manufacturing surveys released Thursday showed Chinese activity slowed in December. Meanwhile, the eurozone manufacturing purchasing managers index in December was confirmed at 52.7 as expected.
“It’s good news and bad news, I guess,” said Ian Nakamoto, director of research at 3 MACS. “Good news in the sense that the Federal Reserve is unlikely to be aggressive in tapering. Bad news in that maybe investors have been bidding up the market because they thought economic data would be stronger than expected.”
Commodity prices were mixed in the wake of the manufacturing data with the February crude contract on the New York Mercantile Exchange down US$2.98 to US$95.44 a barrel.
The TSX energy sector declined 0.73% and financials also contributed to the day’s losses after investors took some profits from a sector that jumped over 20% last year. The sector lost 0.6%.
The base metals sector drifted 0.24% lower as March copper dipped US1¢ to US$3.38 a pound.
TSX losses were held in check by a sharp uptick in the gold sector as bullion prices rebounded. The gold sector was up about 4.45% as February bullion climbed US$22.90 to US$1,225.20 an ounce after the precious metal tumbled 28% last year.
North American markets started a fresh trading year on the back of a solid lift for 2013 with the TSX ahead 9.55%. Gains would have been stronger had it not been for a slide of almost 50% in the gold sector and a 21% tumble in base metals.