TORONTO (Reuters) - Canada’s main stock index tumbled on Wednesday as mining shares were hurt by soft U.S. durable goods data that cast some doubt on the pace of economic recovery, while oil skidded on supply concerns.
A mix of resource names led the index lower, including Suncor Energy Inc (SU.TO), down 1.2 percent at C$32.48, and Cenovus Energy Inc (CVE.TO), which fell 2.4 percent to C$35.40. Barrick Gold Corp (ABX.TO) skidded 1.4 percent to C$43.05, while Teck Resources Ltd TCKb.TO tumbled 3.3 percent to C$34.56.
The key pillars of energy and materials, which comprise some 40 percent of the broader index, sank 1.5 percent and 1.8 percent, respectively.
Oil prices fell on Wednesday on a big rise in U.S. crude inventories and the possibility of a release of strategic oil reserves by the United States and some European nations. <O/R>
Copper prices skidded more than 2 percent after softer U.S. durable goods data cast doubt on the pace of recovery in the world’s biggest economy. The data weighed on investor confidence and on the outlook for base metals demand, sending risk assets lower. Bullion prices fell as well. <MET/L> <GOL/>
A key catalyst was data that showed new orders for long-lasting U.S. factory goods increased only modestly in February, supporting the view that economic growth in the first quarter could be lackluster.
Murray Leith, director of research at Odlum Brown in Vancouver, said the report was a main driving factor. But investors are more broadly concerned about China’s impact on the resource-laden TSX index.
“The Canadian stock market has been much weaker than the U.S. stock market and that’s really been driven by the fact that there’s an increasing amount of evidence that the Chinese economy is slowing down,” said Leith.
“The Canadian stock market is very geared to economic growth in China. If China slows, commodity prices moderate and because resource stocks constitute close to half the index that has negative implications.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE fell 98.18 points, or 0.78 percent, to 12,413.86. Eight of its 10 main sectors were lower, while telecoms were up 0.8 percent and consumer staples climbed 0.2 percent.
David Baskin, portfolio manager and president of Baskin Financial Services, said the market may also have been pressured by investor disappointment with Tuesday’s Ontario budget.
The province’s minority Liberal government put corporate tax cuts on hold and pledged a renewed effort to rein in public sector labor costs in an austerity budget designed to eliminate the deficit in six years and convince rating agencies the province is fiscally sound.
Canada’s most populous province accounts for about 40 percent of the country’s economy.
“The Ontario government has reneged on its pledge to lower corporate taxes. That affects many, many TSX-listed companies simply because all of them do business in Ontario,” said Baskin.
“If taxes are going to be higher, then profits are going to be lower.”
In domestic economic news, Canadian home resale prices rose in January from December, snapping two straight monthly declines, as price gains were registered in seven of 11 metropolitan markets, the Teranet-National Bank Composite House Price Index showed on Wednesday.
Toronto-Dominion Bank (TD.TO), up 0.1 percent at C$85.09, says it may expand its credit card business to the United States following last year’s acquisition of the MBNA Canadian credit card portfolio.
Fibrek Inc FBK.TO, off 7.8 percent at C$1.07, said it will seek permission, along with its friendly bidder Mercer International MRIu.TO, from the Supreme Court of Canada to appeal against a Quebec court decision to block a key term of their deal.
Editing by Chizu Nomiyama