Financial Post
The Toronto stock market kicked off June trading with a sharp loss Friday and commodity prices hit fresh multi-month lows amid data showing a big drop in U.S. job creation last month and a further slowing of China’s economy.
The S&P/TSX composite index fell 152.01 points to 11,361.20. Losses would have been much more severe had it not been for a jump of almost 7% in the gold sector. As it is, the TSX fell 1.86% this week, leaving the main index 5% below where it started the year. The TSX Venture Exchange added 1.86 of a point to 1,291.59.
The U.S. Labor Department said the American economy only managed to create 69,000 jobs last month, far below the modest expectation for 158,000 jobs. The jobless rate edged up 0.1 of a point to 8.2%.
The dismal employment data again reminded investors that the recovery from the 2008 financial collapse and subsequent recession remains slow.
“The job growth is disappointing but it is growth nonetheless so it is all consistent with that,” said Robert Gorman, chief portfolio strategist at TD Waterhouse, who observed that recessions associated with credit crises are longer and deeper than average.
“But it is frustratingly slow — and that’s perhaps the operative phrase here — it’s a frustratingly slow grind as we gradually get out of the credit crisis.”
The TSX and the dollar also failed to find lift from another report showing Canadian economic growth met expectations for the first quarter, rising at an annualized rate of 1.9%.
But the report showed Canadian economic growth faltered at the end of the quarter, with March growth coming in at 0.1%, lower than the 0.3% reading economists expected.
The loonie closed down US0.61¢ to a five-and-a-half-month low of US96.21¢ as traders sold off riskier assets such as resource-based currencies, commodities and equities and sought safety in U.S. Treasuries. The 10-year U.S. Treasury yield dropped below 1.5% for the first time ever, falling to 1.46% late in the afternoon.
U.S. markets retreated as the Dow Jones industrial average plunged 274.88 points to 12,118.57, leaving the blue chip index under water for the year.
The Nasdaq composite index was down 79.86 points to 2,747.48 and the S&P 500 index slid 32.29 points to 1,278.04.
Markets were already poised for a rough ride Friday after China’s state-affiliated Federation of Logistics and Purchasing had earlier reported that its purchasing managers index, or PMI, fell 2.9 percentage points to 50.4% in May, just above the 50 level that signifies expansion. The index was at 53.3 in April.