TSX down amid weak Wal-mart Outlook

TORONTO • The Toronto stock market closed lower Thursday amid data showing the economic recovery in the European Union proceeding at a slower than expected pace and a disappointing outlook from retail giant and economic bellwether Wal-Mart Stores.

The S&P/TSX composite index dropped 84.84 points to 14,588.89.

The Canadian dollar was up 0.05 of a cent at US91.94¢.

U.S. indexes finished the session deep in the red as the Dow Jones industrials tumbled 167.16 points to 16,446.81, leaving the index in negative territory for the year to date. The Nasdaq dropped 31.33 points to 4,069.29 and the S&P 500 index fell 17.68 points to 1,870.85.

Wal-Mart’s quarterly earnings came in at US$3.59-billion, or US$1.11 per share, down from US$3.78-billion, or US$1.14 per share a year ago as bad winter weather kept shoppers away. Its performance missed Wall Street’s view and, on top of that, the world’s biggest retailer gave a second-quarter earnings forecast below analysts’ estimates. Wal-Mart’s stock fell US$1.91 or 2.43% to US$76.83.

Meanwhile, Eurostat, the EU’s statistics office, said the eurozone saw output grow by only 0.2% in the first quarter from the previous three-month period. Economists had expected a 0.4% increase. A large chunk of the blame for the underperformance can be placed on a flat performance in France, Europe’s secondlargest economy behind Germany.

The figures are likely to strengthen arguments for the European Central Bank to cut interest rates and take further stimulus measure at its next meeting June 5.

“It certainly seems like there is more support for more unorthodox sort of monetary policy out of Europe,” said Stephen Lingard, managing director, Franklin Templeton Solutions.

The gold sector was down about 1.75% as June bullion fell US$12.20 to US$1,293.50 an ounce. July copper was down 2¢ at US$3.14 a pound and the base metals sector eased 1.06%.

The energy sector fell 0.7% as June crude on the New York Mercantile Exchange fell US87¢ to US$101.50 a barrel.

Bombardier also weighed on the TSX after Air Canada decided not to immediately replace its remaining fleet of narrowbody Embraer E190s with the transport giant’s CSeries airliners. The carrier said the 90-seat aircraft are still relatively young and it prefers to avoid more capital expenditures and debt as it focuses on adding 37 Boeing 787 Dreamliners and retrofitting 18 Boeing 777s with more seats. Bombardier shares fell 30¢ or 7.14% to $3.90 on very heavy volume of 42.6 million shares.

Air Canada also posted an adjusted net loss of $132-million, or 46¢ per diluted share, compared with a net loss of $143-million, or 52¢ per share, year over year as it was impacted by a lower Canadian dollar. Its shares slipped 31¢ to $7.91.

Elsewhere, Scotiabank wants to sell some or all of its 37% stake in asset manager CI Financial Corp. That position, acquired in 2008, is worth about $3.8-billion and the bank believes it can more profitably deploy the capital elsewhere. CI Financial shares fell $1.15 or 3.18% to $34.98, while Scotiabank was up 56¢ to $67.53.