April 11, 2014 / 11:43 AM / 5 years ago

TSX hits two-week low as U.S. selloff deepens

TORONTO (Reuters) - Canada’s main stock index dropped on Friday to its lowest in two weeks after a prolonged slump in the U.S. technology and biotechnology sectors weighed on the appetite for equities and helped pull down shares in most major groups.

A Bay Street sign, a symbol of Canada's economic markets and where main financial institutions are located, is seen in Toronto, May 1, 2013. REUTERS/Mark Blinch

The anxiety that some share prices might have run ahead of themselves, combined with uncertainty about the U.S. Federal Reserve’s monetary policy, remained a drag on sentiment.

Investors digested data on Friday that showed U.S. producer prices jumping the most in nine months in March on a surge in the cost of food and services.

The Toronto market’s benchmark index declined for a second straight session and ended the week almost 1 percent lower.

“There’s obviously a correction going on,” said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates. “There’s been a lot of momentum in the market, and (investors are) now reappraising geopolitical and earnings factors.”

“The markets are rebalancing themselves, from an excess focus on central bank policy to earnings delivery by companies,” he added.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 50.31 points, or 0.35 percent, at 14,257.69. It is still up about 4.7 percent this year.

“The market has had a pretty good run here, so a little sideways movement is not going to hurt,” said David Cockfield, managing director and portfolio manager at Northland Wealth Management. “I’m waiting for the panic to settle down.”

“I don’t see any fundamental cracks in the system,” he added. “The market looks reasonably priced, but it needs a rest.”

Eight of the 10 main sectors on the index were in the red.

Financials, the index’s most heavily weighted sector, gave back 0.2 percent. Manulife Financial Corp (MFC.TO) shed 0.7 percent to C$20.14.

Industrials slipped 0.8 percent, with Canadian Pacific Railway Ltd (CP.TO) falling 0.5 percent to C$158.

The materials sector, which includes mining stocks, declined nearly 1 percent as some commodity prices turned weaker. Goldcorp Inc (G.TO) was down 1.5 percent at C$26.45, and Barrick Gold Corp (ABX.TO) lost 0.4 percent to C$20.45.

($1=$1.09 Canadian)

Editing by Peter Galloway and Chris Reese

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