CANADA STOCKS-TSX skids to two-week low as commodities slump

Tue May 3, 2011 5:14pm EDT
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   * TSX down 242.14 points, or 1.74 pct, at 13,692.37
 * All 10 main sectors fall
 * Commodities slump on demand worries, US$ strength
 (Adds comments, details, background)
 By Solarina Ho
 TORONTO, May 3 (Reuters) - Toronto's main stock index
posted its biggest one-day drop in nearly a month on Tuesday as
falling commodity prices drove resource issues deep into
negative territory and led a broad-based retreat.
 The drop by the TSX index mirrored a slide in the price of
oil, which fell more than 2 percent, which largely overshadowed
the solid victory of the business-friendly Conservatives in
Monday's federal election.
 "Let's face it, our equity markets, for the most part ...
it all comes down to what these commodity prices are doing.
Today, I think that's taken over as the story," said Gareth
Watson, vice-president, investment management and research, at
Richardson GMP.
 The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE plunged 242.14 points, or 1.74 percent, to 13,692.37.
That marked a two-week low and the index's biggest one-day drop
since March 10. All 10 of its main sectors fell.
 During the session, the benchmark tumbled more than 2
percent to 13,618.76, its lowest point since April 18.
 The energy and materials groups -- which combined make up
about 50 percent of the index -- fell more than 2.7 percent
each, as demand worries and a strengthening U.S. dollar sapped
investor appetite for commodities. [GOL/][IO/R]
 Suncor Energy SU.TO sank 5.59 percent to C$41.55, and was
the index's heaviest decliner even though the country's biggest
energy company reported a higher quarterly profit on Tuesday.
Its drag on the index was nearly three times more than the next
biggest decliner, Potash Corp POT.TO, which was off 3.11
percent at C$51.46. [ID:nL3E7G312N]
 Goldcorp G.TO fell 2.85 percent to C$48.69, while Barrick
Gold ABX.TO lost 2.1 percent to C$46.25 as gold prices
dropped from record highs above $1,570 an ounce on waning
safe-haven buying. Silver prices also had their biggest two-day
loss since December 2008.
 "We've got the implosion of the silver and gold markets,
which were clearly in a bubble territory," said Barry Schwartz,
vice-president and portfolio manager at Baskin Financial
 "It's too early to say if they are being deflated or not,
but there's been erratic trading in those commodities, and
those investors who rode them up are now thinking twice about
what they should do next."
 The financial group sagged 1.06 percent with Manulife
Financial MFC.TO down 4 percent to C$16.80.
 Despite Tuesday's plunge, Francis Campeau, a broker at MF
Global Canada in Montreal, said the Conservative victory in
Monday's election will offer the market long-term stability.
 The party won a majority in Monday's general election and signaled it would
follow a tax-cut and business-friendly agenda. [ID:nN03253899]
 "By (the Conservatives) getting a clear majority in the
Parliament, markets are able to handicap investment
opportunities better," said Stephen Wood, chief investment
strategist for North America at Russell Investments in New
 ($1=$0.95 Canadian)
 (Additional reporting by Ka Yan Ng; editing by Rob Wilson)