Miners back off amid tepid chinese data
• The Toronto stock market closed lower Friday as mining stocks lost ground amid disappointing data from China.
The S&P/TSX composite index declined 45.33 points to 13,548.86 as traders also looked ahead to the start of the U.S. fourthquarter earnings season next week.
The Canadian dollar rose US0.30¢ to US93.99¢.
New York indexes were mixed amid bullish comments on the U.S. economy from outgoing Federal Reserve chairman Ben Bernanke.
Mr. Bernanke says Americans’ finances have improved and the outlook for home sales is brighter. He also expects less drag from federal spending cuts and tax increases. Combined, those factors bode well for U.S. economic growth in coming quarters.
The Dow Jones industrial average rose 28.64 points to 16,469.99, Nasdaq dipped 11.16 points to 4,131.91 while the S&P 500 index edged 0.61 of a point lower to 1,831.37.
The coming week will see earnings reports from heavyweights, including resource company Alcoa Inc. and financial giants American Express Co., JPMorgan Chase & Co. and Wells Fargo & C0.
Bloomberg News says that earnings are expected to rise just 3.7% in the fourth quarter, excluding financial companies.
Hopes are high that strong earnings can support the huge run-up on U.S. markets last year, particularly after the Fed signalled last month that it is winding down a key area of stimulus.
The U.S. Federal Reserve ended months of speculation last month and announced it would be cutting back on its US$85billion of monthly bond purchases. Those purchases are credited with supporting a strong rally on stock markets in 2013, including a 30% surge in the S&P 500 to a record high.
Meanwhile, base metal prices backed off as China’s official non-manufacturing Purchasing Managers’ Index fell to a fourmonth low, coming in at 54.6 in December from 56 in November. A reading above 50 indicates expansion.
China is the world’s second-biggest economy and its double-digit growth of the past and huge appetite for commodities had been a huge plus for a resource-based market like the TSX.
But traders have had to get used to a more modest growth rate of between 7% and 7.5% as the Chinese government keeps the lid on growth in order to keep inflation under control.
North American markets got off to a lacklustre start to 2014 trading Thursday amid a slate of data showing manufacturing sectors in China, the U.S. and Canada still expanding but at a slower pace.
Base metals were down 1.4% as March copper on the New York Mercantile Exchange lost US3¢ to US$3.35 a pound. The gold sector gave up early gains to post a loss of about 1% as February bullion gained US$13.40 to US$1,238.60 an ounce.
Energy stocks also weighed on the TSX as crude fell 6% this past week due to growing inventories in the U.S. and an expected recovery in Libyan production.
The energy sector lost 0.6 as February crude on the Nymex fell US$1.48 to US$93.96 a barrel.