April 3, 2013 / 12:33 PM / in 5 years

TSX erases 2013 gains after weak U.S. data

TORONTO (Reuters) - Canada’s main stock index tumbled more than 2 percent on Wednesday, recording its biggest one-day percentage decline in more than nine months, as sluggish U.S. economic data dampened hopes for a smooth recovery.

A Bay Street sign is seen in the heart of the financial district in Toronto, August 17, 2009. REUTERS/Mark Blinch

The selloff erased all the gains the index has made since the start of the year and took it to its lowest point in more than three months.

U.S. data showed companies hired at the weakest pace in five months in March as recent strong demand for construction jobs evaporated, while growth in the vast services sector slowed.

The reports sparked concern that the recent pick-up in U.S. economic growth is losing momentum and provoked caution among investors ahead of Friday’s all-important government report on employment for March. Wall Street, oil and commodity prices all slumped in response. <MKTS/GLOB>

“It’s a broad selloff based on fear that there isn’t going to be a rebound anytime soon,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.

“People are nervous,” he added. “They’re saying, ‘I‘m going to run for the hills and I‘m going to take my money with me.'”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 259.98 points, or 2.05 percent, at 12,422.12, putting its year-to-date return in negative territory. It was the biggest percentage drop for the index since June 21, 2012.

“I think the market is ahead of where the fundamentals would put it,” said Michael Sprung, president of Sprung Investment Management. “There’s likely to be a correction, and this could be the beginning of it.”

The benchmark Canadian index, falling for the third straight session, has had a wobbly climb since its lows in November, and it has badly trailed the record runs of its U.S. peers.

Nine of the 10 sectors of the index were in the red.

Financials, the index’s weightiest sector, lost 1.4 percent. Royal Bank of Canada (RY.TO) declined 1.4 percent to C$61.34.

Shares of Manulife Financial Corp (MFC.TO) were down 3.2 percent at C$14.58 after news the insurer was losing two of its top executives in Asia.

In other company news, Toronto-Dominion Bank (TD.TO) said Chief Executive Ed Clark plans to retire in late 2014, and Bharat Masrani, group head of U.S. personal and commercial banking, will succeed him. TD shares closed down 1.2 percent at C$83.43.

Canadian Pacific Railway Ltd (CP.TO) shares were down 3 percent C$122.51. The company said early estimates are that about four barrels of crude oil were spilled when one of its trains derailed in northern Ontario.

The energy group gave back 3.3 percent. Suncor Energy Inc SU.TO also fell 3.3 percent to C$30.17.

The materials sector, which includes miners, fell 3.4 percent.

Shares of gold producers dived 4.7 percent, extending this year’s dramatic decline. The group is down more than 20 percent this year to date.

The price of bullion fell 1.5 percent, hitting a nine-month low. Barrick Gold Corp (ABX.TO) fell 5.6 percent to C$27.09.

Outside the main stock index, Absolute Software Corp (ABT.TO) soared 16.4 percent to C$6.39 after the company said Samsung Electronics Co Ltd (005930.KS) will use its software, which tracks stolen mobile devices.

($1=$1.01 Canadian)

Additional reporting by Allison Martell and Jeffrey Hodgson; Editing by Peter Galloway

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