Canadian stocks settled lower for a second day Thursday, plunging nearly 3 percent on global cues with commodity prices plummeting after some soft economic data from Europe, China and the U.S. Investor sentiments were at a low after the U.S. Federal Reserve failed to provide any monetary stimulus measures, which had been widely expected this time.
Investors weighed global growth concerns after the National Association of Realtors reported a slightly bigger than expected drop in U.S. existing home sales in May, while the Philadelphia-area manufacturing firms indicated weaker business conditions in June, a Federal Reserve Bank of Philadelphia report showed Thursday.
Meanwhile, a survey showed China's factory output contracted for an eighth straight month in June, indicating the country's economic trough may extend well into the third quarter.
Eurozone suffered another steep fall in private sector activity in June, the steepest in three years, as a fallout from the debt crisis engulfing the bloc.
Toronto's main index, the S&P/TSX, closed Thursday at 11,408.32, down 351.02 points or 2.99 percent. The S&P/TSX Composite Index touched an intraday high of 11,752.92 and a low of 11,405.83.
The TSX Venture Index closed at 1,216.40, down 38.17 points or 3.04 percent. The index opened at 1,245.34 compared to its previous close of 1,254.57.
All major components of the S&P/TSX Index were deep in the red, led predominantly by resource stocks.
The Diversified Metals & Materials Index plunged 5.47 percent, with Inmet Mining (IMN.TO) dropping 5.72 percent, First Quantum Minerals (FM.TO) down 5.86 percent, and Teck Resources (TCK.B.TO) losing 5.03 percent. Osisko Mining Corporation (OSK.TO) shed 6.18 percent.
Oil prices plunged to its lowest since early October following the release of the EIA report. U.S. crude oil futures for August delivery, the new front-month contract, dropped $3.25 or 4 percent to close at $78.20 a barrel Thursday on the NYMEX.
The Energy Index plummeted 5.43 percent with Suncor Energy Inc. (SU.TO) shedding 6.54 percent, Canadian Natural Resources Limited (CNQ.TO) down 6.18 percent, and Encana Corporation (ECA.TO) plunging 7.68 percent. Talisman Energy Inc. (TLM.TO) slumped 5.95 percent, while Imperial Oil Ltd. (IMO.TO) plunged 6.23 percent.. Niko Resources Ltd. (NKO.TO) dived 38.64 percent after reporting a decline in reserves.
Natural gas transportation company TransCanada Corp. (TRP.TO) slipped 1.32 percent after announcing that it does not endorse an unsolicited mini-tender offer by TRC Capital Corp. to buy up to 2.0 million shares of TransCanada at a price of C$40.50 per share.
Gold futures for August delivery plunged $50.30 or 3.1 percent to close at $1,565.50 an ounce Thursday on the NYMEX. The Global Gold Index slipped 4.38 percent.
Among gold stocks, Kinross Gold Corp. (K.TO) dropped 4.96 percent, while Barrick Gold Corp. (ABX.TO) shed 3.61 percent. Eldorado Gold Corp. (ELD.TO) lost 4.68 percent and Goldcorp Inc. (G.TO) surrendered 3.13 percent.
The Materials Index plunged 4.19 percent with Potash Corporation of Saskatchewan Inc. (POT.TO) shedding 1.80 percent and Rubicon Minerals Corp. (RMX.TO) slipping 5.34 percent.
The Financial Index slipped 2.27 percent with Royal Bank of Canada dropping 3.20 percent, Bank of Nova Scotia (BNS.TO) down 1.73 percent, and Toronto-Dominion Bank (TD.TD) down 2.79 percent. Manulife Financial Corp. (MFC.TO) shed 3.21 percent.
Heavyweights transportation systems maker Bombardier Inc. (BBD.A.TO) slipped 4.71 percent, while smartphone maker Research In Motion Limited (RIM.TO) dropped 1.53 percent.
Bombardier's Aerospace division said a wholly owned subsidiary of Nordic Aviation Capital A/S of Billund, Denmark has signed an agreement to buy twelve CRJ1000 NextGen aircraft.
In economics news, Statistics Canada said retail sales declined 0.5 percent to $38.9 billion in April, reversing gains in March. Sales at motor vehicle and parts dealers fell 1.2 percent in April, more than offsetting the rise in March.
First-time claims for U.S. unemployment benefits showed a modest decrease in the week ended June 16th, the Labor Department said Thursday. New unemployment claims came in at a seasonally adjusted level of 387,000 for the week, a decrease of 2,000 from the previous week's revised level of 389,000. Economists expected jobless claims to dip to 383,000 from the 386,000 originally reported for the previous week.
Reversing a slight decline in April, the Conference Board's index of leading U.S. economic indicators showed an unexpected increase by 0.3 percent in May, after edging down by 0.1 percent in April. Economists expected the index to remain unchanged.
Citing supply constraints rather than softening demand, the National Association of Realtors' report showed a slightly bigger than expected drop in U.S. existing home sales in May. Existing home sales declined by 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. Economists expected a modest decrease to an annual rate of 4.57 million.
Philadelphia-area manufacturing firms indicated weaker business conditions in June, a report by the Federal Reserve Bank of Philadelphia showed Thursday. The Philly Fed's diffusion index of current activity dropped to a negative 16.6 in June from a negative 5.8 in May. A negative reading indicates contraction in regional manufacturing activity. Economists expected the index to rebound to a positive 0.5.
The index of regional manufacturing activity dropped to its lowest level since the negative 22.7 in August 2011.
The eurozone suffered another steep fall in private sector activity in June, the steepest in three years, as the fallout from the debt crisis engulfed the bloc. The Composite Output Index, which measures the performance of both manufacturing and service sectors, remained unchanged at 46, the lowest since June 2009, a Markit Economics survey revealed. Economists expected a decline to a reading of 45.5.
Meanwhile, U.K. retail sales recovered at a faster than expected pace in May after easing in April, the Office for National Statistics said. Retail sales volume, including automotive fuel, rose 1.4 percent from the prior month, when it was down 2.4 percent. The increase was bigger than the expected growth of 1.2 percent.
by RTT Staff Writer
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