TSX can’t escape China’s shadow
The Toronto stock market closed lower Tuesday as lingering concerns about lagging global growth and a fresh spate of data out of China weighed on metals and mining and gold stocks.
The Toronto Stock Exchange’s S&P/TSX index ended the day down 70.99 points at 13,411.63. The loss came on the heels of a 70.68 point decline on Monday, when the index closed at 13,482.62.
The metals and mining sector of the TSX slipped 3.6 per cent, while gold stocks declined by 2.2 per cent. Utilities stocks — a sector perceived as defensive — rose 0.6 per cent.
Todd Mattina, chief economist and strategist at Mackenzie Investments, said investors may be reacting to data out of China overnight that indicates deflationary pressures are persisting in the world’s second-largest economy. Slowing demand from China bodes poorly for Canadian commodity producers.
In New York, markets were mixed as investors continued to mull how stronger-than-anticipated U.S. employment data out last week will impact the pace of an interest rate hike from the U.S. Federal Reserve.
The Dow Jones average of 30 stocks climbed 27.73 points to 17,758.21, the broader S&P 500 index gained 3.14 points to 2,081.72 and the Nasdaq index lost 12.06 points to 5,083.24.
The latest U.S. employment report, which came out on Friday, showed the U.S. economy added 271,000 jobs in October. That left many investors expecting the Fed to begin raising its benchmark interest rate — which has been at historical lows since the global financial crisis — in December, with odds growing that another rate hike will follow in March.
Mattina said that although a rate hike could indicate that the underlying economy is strong enough to stomach the increase, investors are concerned that the higher borrowing costs associated with it would come at a time when corporate profits in the U.S. are already under pressure.
“The key in my mind is really not when the Fed starts hiking rates,” Mattina said. “The big question is where does the Fed stop hiking rates, and at what pace will it be hiking rates? I think that’s really going to be the key driver for stocks and bond prices for the rest of this year and into 2016.”
On the commodity markets, the December gold contract rose 40 cents (U.S.) to $1,088.50 an ounce, the December crude contract climbed 34 cents to $44.21 a barrel and the December contract for natural gas was up two cents at $2.32 per mmBtu. December copper declined by a penny to $2.22 a pound.
Meanwhile, the loonie gained 0.06 of a cent to 75.39 cents U.S.
Shares of Amaya plunged 32.4 per cent, or $10.13, to $21.10 after the Montreal-based gaming company lowered its financial expectations for the year, partly due to the fact that the stronger U.S. dollar has eaten into revenues.