Canadian stocks snapped a four-day gain to end lower Thursday, tracking declining global equity markets after some weak manufacturing data out of China, and the U.S. Federal Reserve's stand on its monetary policy. Global markets roiled after Japan's Nikkei plunged to its lowest since the devastating earthquake and tsunami hit the island nation about two years ago.
Japan's Nikkei index plummeted 7.3 percent, attributed largely to a spike in 10-year government bond yields which rose over 1 percent, the highest in over a year. The Nikkei was also impacted by the confusion over the U.S. Federal Reserve's stand on its quantitative easing policy going forward. The uptrend in Japanese equities over the past three months were some of the best globally, with cumulative gains of 20.9 percent. Prior to the downturn, the Nikkei gained 12.7 percent in May and was up 50.3 percent on the year.
The U.S. Federal Reserve said yesterday it would continue a policy of aggressive easing until the unemployment rate in the country improved. Nonetheless, U.S. Federal Reserve Chief Ben Bernanke in his testimony before the Congress gave indications of scaling down its quantitative easing program in the near future.
Minutes of the Federal Reserve's meeting revealed "a number" of members favored tapering the central bank's $85-billion bond-buying program as early as June meeting if the labor market continues to improve.
Also contributing to the downturn was news that China's manufacturing sector contracted for the first time in seven months in May. The drop comes amid poor demand, fueling concerns of weakness in the economy that may persist for some more time.
The U.S. markets pared much of the losses after first-time claims for U.S. unemployment benefits fell more than expected last week, a Labor Department report indicated Thursday. In another upbeat sign for the U.S. housing market, a Commerce Department report on Thursday showed new home sales to have climbed 2.3 percent in April, well above analysts' estimates.
The S&P/TSX Composite Index closed Thursday at 12,658.09, down 94.41 points or 0.74 percent. The index touched an intraday high of 12,748.57 and a low of 12,598.87. The Index added nearly 300 points or just over 2 percent in the past four sessions.
The Global Gold Index gained 0.41 percent, with gold futures for June delivery surging $24.40 or 1.8 percent to close at $1,391.80 an ounce Thursday on the Nymex.
The Capped Materials Index shed 0.87 percent, with Potash Corporation of Saskatchewan Inc.(POT.TO) dropping 2.07 percent.
Among gold stocks, Yamana Gold Inc. (YRI.TO) gained 0.27 percent, while Goldcorp Inc. (G.TO) slipped 0.46 percent. IAMGOLD Corp. (IMG.TO) added 1.15 percent, while Kinross Gold Corp. (K.TO) gathered 1.86 percent. Barrick Gold Corp. (ABX.TO) dropped 0.49 percent.
The Diversified Metals & Mining Index plunged 2.89 percent, with First Quantum Minerals Ltd. (FM.TO) dropping 2.91 percent, Lundin Mining Corp. (LUN.TO) down 2.89 percent, and Teck Resources (TCK.B.TO) plunging 4.34 percent.
The Energy Index slipped 0.59 percent, after U.S. crude oil futures for July delivery dipped $0.03 to close at $94.25 a barrel Thursday on the Nymex.
Among energy stocks, Suncor Energy Inc. (SU.TO) slipped 0.52 percent, while Canadian Natural Resources Limited (CNQ.TO) edged down 1.30 percent. Canadian Oil Sands Limited (COS.TO) shed 0.83 percent, while Encana Corp. (ECA.TO) gained 1.85 percent.
The Financial Index slipped 0.40 percent, with Manulife Financial Corp. (MFC.TO) down 1.23 percent and Bank of Montreal (BMO.TO) edging up 0.03 percent. Royal Bank of Canada (RY.TO) shed 0.54 percent, while Bank of Nova Scotia (BNS.TO) lost 0.44 percent.
The Toronto-Dominion Bank Group (TD, TD.TO) lost 0.46 percent despite reporting second-quarter net income of C$1.72 billion, up from C$1.69 billion a year ago. Earnings per share remained flat at C$1.78. Adjusted earnings for the quarter totaled C$1.90, while the company posted C$1.82 per share a year ago.
The Information Technology Index dropped 0.46 percent, with BlackBerry (BB.TO) down 1.00 percent.
The Capped Industrials Index shed 1.06 percent, with Bombardier Inc. (BBD.A.TO, BBD.B.TO) up 1.08 percent.
In economic news from the U.S., the Labor Department said that initial jobless claims fell to 340,000 in the week ended May 18, a decrease of 23,000 from the previous week's revised figure of 363,000. Economists had expected jobless claims to drop to about 345,000 from the 360,000 originally reported for the previous week.
Separately, the Commerce Department said that new home sales climbed 2.3 percent to a seasonally adjusted annual rate of 454,000 in April from the revised March rate of 444,000. Economists had expected new home sales to rise to an annual rate of 425,000 compared to the 417,000 originally reported for the previous month, reflecting a 1.9 percent increase.
China's manufacturing sector contracted in May, with the headline purchasing managers' index, an indicator of the health of the factory sector, dropping to a seven-month low of 49.6 from 50.4 in April. Readings below 50 indicate contraction of the sector. Economists expected the index to remain unchanged from March's level.
Elsewhere, Germany's private sector activity improved from a five-month low, but remained marginally below the neutral level, flash survey results from Markit Economics showed. The composite output index rose to 49.9 in May from a five-month low of 49.2 in April. A reading below 50 suggests contraction.
Consumer sentiment in the euro area increased for the sixth consecutive month in May to its strongest level since the middle of last year, preliminary data from the European Commission showed Thursday. The DG ECFIN flash estimate of the consumer confidence came in at -21.9, up from April's final score of -22.3. Economists expected a score of -21.8 for May. The confidence indicator for the EU also improved in May, rising to -20.2 from -20.4.
Meanwhile, eurozone private sector activity continued to decline in May, but at a slower pace than in the previous month, flash results of a survey by Markit Economics showed. The composite output index, that measures performance of the both manufacturing and service sectors, rose to 47.7 in May from 46.9 in April. Economists expected the reading to rise to 47.2.
The U.K. economy avoided recession in the first quarter as initially estimated, second estimates from the Office for National Statistics showed. Gross domestic product grew 0.3 percent sequentially in the first quarter, offsetting the last quarter's 0.3 percent fall.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.