Health-care stocks lead TSX decline
North American stock markets closed sharply in the red Monday as more evidence of a continuing slowdown in China, the world’s secondlargest economy, delivered a blow to commodity prices.
In Toronto, the S&P/TSX index plunged 373.99 points or 2.8 per cent to 13,004.58. The massive decline was led by the health-care sector, which lost more than10 per cent, and metals and mining, which slipped more than 9 per cent.
Oil and metals prices fell after Chinese government statistics showed that profits at the country’s industrial companies plunged 8.8 per cent last month.
The November contract for bench- mark crude oil was down $1.27 (U.S.) at $44.43 a barrel while December copper gave back three cents to $2.25 a pound. Even gold took a beating, with the December contract falling $13.90 to $1,131.70 an ounce.
“People traditionally buy gold for safety reasons, to diversify away from other assets. That’s not what’s happening right now,” said Luciano Orengo, managing director and portfolio manager at Manulife Asset Management.
“There are fears that the Chinese are selling some gold, to raise some cash to put back into the economy to try to stimulate it.”
An added influx of supply would put downward pressure on the price of the precious metal, Orengo said.
Elsewhere in commodities, the No- vember natural gas gained four cents to $2.67 per thousand cubic feet.
The loonie was off 0.44 of a cent (U.S.) at 74.66 cents. The last time the loonie closed below that level was in June 2004.
In New York, the Dow Jones gave back 312.78 points, or1.92 per cent, to 16,001.89, while the broader S&P 500 declined 49.57 points, or 2.57 per cent, to 1,881.77 and the Nasdaq plunged a whopping142.53 points, or 3.04 per cent to 4,543.97.
Meanwhile, in corporate news, Valeant Pharmaceuticals — a heavily weighted stock on the TSX — fell by 16.3 per cent, or $43.20, to close at $221.81after U.S. congressional Democrats asked to subpoena documents from the drugmaker related to massive price increases for two drugs.
They claim Valeant increased the price of congestive heart failure treatment Nitropress and another heart drug, Isuprel, by 212 and 525 per cent respectively on the day it purchased the rights to them from Marathon Pharmaceuticals.
“A lot of pharma companies have been put under scrutiny,” Orengo said. “Last week Hillary Clinton was talking about making some of these companies’ spend on R&D mandatory.”
In other corporate news, Alcoa Inc. bucked the downward trend after announcing that it will split into two independent companies. Its bauxite, aluminum and casting operations will be in one company and its engineering and transportation businesses will be in another.