TSX drops hard as commodity prices fall
By John Tilak
TORONTO (Reuters) - Canada's main stock index fell more than 1 percent on Wednesday, hurt by sluggish economic data from China that yanked commodity prices lower and by weak earnings reports from some of the country's biggest companies.
Growth in the manufacturing sector in China, a big consumer of commodities from Canada, slowed unexpectedly in April as new export orders fell, raising fresh doubts about the strength of that economy after a disappointing first quarter.
The market also reacted nervously to the U.S. Federal Reserve's move to keep buying $85 billion in bonds each month to keep interest rates low and spur growth.
Offsetting some of the weakness was a gain in shares of coffee-shop chain Tim Hortons Inc THI.TO after an activist shareholder called for changes in the way the company is run, and a rise in grocery-chain Loblaw Cos Ltd's (L.TO: Quote) stock after the company reported first-quarter results.
The Toronto index, which recorded its second-biggest percentage jump of the year thus far on Tuesday, gave up most of those gains on Wednesday and slipped back into negative territory for the year.
"The Fed statement was fairly ambiguous for most investors," said Youssef Zohny, portfolio manager at Stenner Investment Partners, a unit of Richardson GMP. "It seems like investors are pretty disappointed."
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 135.21 points, or 1.09 percent, at 12,321.29. The TSX index is badly lagging the U.S. S&P 500 .SPX index, which is up about 12 percent on the year.
"The TSX has some catching up to do with the global markets," Zohny said. "There could be relative outperformance if we see some stability in commodities and the economic data." Continued...