Falling commodities slam TSX
Closes near lowest point of the year as widespread slowdown feared
Canada’s benchmark stock index had one of its lowest closes of the year on Thursday, dropping sharply along with commodity prices after the president of the European Central Bank said the region’s economic outlook was “uncertain.”
The S&P/TSX composite index fell 215.22 points, or 1.76 per cent, to 12,014.90.
All 10 of the sub-indexes declined, led by health care, which fell 8.51 per cent due in large part to a 9.14 per cent decline in the share price of Valeant Pharmaceuticals, which fell after at least one analyst cast doubt on its earnings forecast. Valeant closed at $50.61.
All three of the most heavily weighted sectors lost ground, with materials down 2.92 per cent, energy off 2.02 per cent and financials falling 1.11 per cent. Despite first-quarter earnings well above expectations, Manulife Financial fell 2.70 per cent to close at $12.98.
The price of crude oil fell $2.68 to $102.54 US a barrel on Thursday, and gold tumbled $19.20 to $1,634.80 US an ounce after the ECB left its benchmark rate at a record low one per cent. President Mario Draghi said directors hadn’t discussed lowering it.
Mixed economic news from the U.S. on Thursday added to concerns about a widespread economic slowdown. While one report from the U.S. said initial jobless claims for the previous week were well below expectations, another report suggested non-manufacturing industries, which account for nearly 90 per cent of the U.S. economy, declined in April.
“Disappointing service PMI numbers released [Thursday] for the U.K. and U.S. provided additional evidence suggesting that even the economies that had been relatively stronger through the winter have started to fade again,” said Colin Cieszynski, an analyst with CMC Markets.
The Dow Jones industrial average fell 61.98 points, or 0.47 per cent, to 13,206.59 and the Nasdaq composite fell 35.55 points, or 1.16 per cent, to 3,024.30.
Canada’s junior Venture exchange fell 14.67 points, or 1.02 per cent, to 1,416.54.
The Canadian dollar dipped another 25 basis points to $1.0112 US on the U.S. data.