GLOBAL WORRIES PUSH TSX TO APRIL LEVELS
TORONTO • The Toronto stock market closed sharply lower Friday, racking up its third triple- digit slide this week as worries about the global economy left the main index at its lowest level since April.
The S& P/ TSX composite index fell 233.24 points to 14,227.36, capping a string of losses this week that were also sparked by the central bank’s moves to remove stimulus measures, as well as a stronger U. S. dollar.
The loonie lost US0.35¢ to US89.15¢ as the greenback weighed on the Canadian dollar, despite data showing that the economy created 74,100 jobs last month, far above the gain of 20,000 positions that economists had expected.
U. S. indexes also fell as the Dow Jones industrial average gave up the last of its year- to- date gains, falling 115.15 points to 16,544.10. Nasdaq plunged 102.10 points to 4,276.24, while the S& P 500 index was down 22.08 point to 1,906.13.
Global economic worries deepened this week as German announced big declines in exports, factory orders and production, raising worries that Europe’s economic powerhouse could fall back into recession. There is pressure on the European Central Bank to embark on further stimulus moves. But ECB president Mario Draghi made it clear Thursday that governments need to do more on the fiscal side.
Worries about the global economy were already elevated after the International Monetary Fund downgraded its economic forecast this past week, helping push stocks well off the high- water mark that was reached in late summer. The TSX is down 8.6% from its highs, leaving it up 4.44% year to date. The Dow is down 4.25% from its summer highs.
“We have been expecting the proverbial 10% correction for a long time”, said Monika Skiba, senior portfolio manager at Manulife Asset Management.
“We’re overdue for volatility and it seems to be the traditional time of the year when people are revising their estimates and, this week, everybody decided that global growth is not what we would like it to be and there are question marks about all kinds of demand outside the U. S.”
There are also jitters on markets about the impending end to the years- long move by the Fed to keep long- term interest rates low. Its third program of quantitative easing, involving the massive purchase of bonds, comes to an end this month. Analysts observe that stocks retreated sharply at the end of the Fed’s previous quantitative easing programs.
A strong greenback has also hurt sentiment since a rising currency weighs on U. S. exports .
The TSX fell 562 points, or 3.8%, this week alone, with the energy sector down more than 7% as oil retreated to 22- month lows just below the US$ 86 a barrel level. The sector lost 1.8% Friday as the November crude contract in New York rose US5¢ to a 22- month low of US$ 85.82 a barrel.
Falling railroad stocks helped push the industrial sector down 2.65%.
The gold sector faded 1.8% while December bullion was US$ 3.60 lower to US$ 1,221 an ounce. The base metals sector dropped 1.45% while December copper was unchanged at US$ 3.03 a pound.