By Malcolm Morrison
TORONTO – The Toronto stock market was higher Tuesday as traders cautiously bought into stocks that sustained steep losses in the previous session when disappointing Chinese growth data sent commodities and resource stocks tumbling.
The S&P/TSX composite index gained 69.01 points to 12,073.89 after the market registered its biggest one-day tumble since last June and the lowest close since mid-November, plunging 333 points.
The TSX was also heavily pressured Monday by gold prices, which fell US$140 an ounce to their lowest level in more than two years amid fears that European governments may sell the precious metal as part of their debt-fighting measures. Prices recovered slightly Tuesday but were well off session highs, up $26.90 to US$1,388 an ounce.
Monday’s plunge left the TSX down 3.45 per cent year to date.
The Canadian dollar gained 0.29 of a cent to 97.81 cents US after falling more than a cent on Monday.
U.S. indexes were also positive after New York indexes sustained their biggest drops of 2013 as investors looked to signs of further strength in the housing market ahead of the spring buying season.
The Dow Jones industrials gained 83.4 points to 14,682.6 after the blue chip index plunged 266 points Monday, interrupting a rally that has gone on practically non-stop all year.
The Commerce Department reported that U.S. builders broke ground in March at the fastest pace in almost five years. Housing starts came in at a seasonally adjusted annual rate of 1.04 million, up by seven per cent from February.
The Nasdaq composite index was ahead 23 points to 3,239 while the S&P 500 index advanced 10.6 points to 1,562.96.
The modest recovery from Monday’s sell-off came amid a worsening outlook for the world economy this year from the International Monetary Fund.
The global lending organization has cut its forecast for global growth to 3.3 per cent this year, down from its forecast in January of 3.5 per cent. The IMF predicts that government spending cuts will slow U.S. growth and keep the euro currency alliance in recession.
“I think this bearish sentiment is starting to kind of grow,” said John Kinsey, portfolio manager at Caldwell Securities.
“Early on in the year, there were some decent numbers out of the U.S. and it looked like their economy maybe was finally going to find a little bit of traction. But the latest numbers that we have been getting haven’t been very encouraging and that is sort of the last thing we need because Europe is a total disaster and you can’t expect that China is going to pull it out all by itself.”
The IMF is keeping its prediction of four per cent global growth in 2014
TSX gains were led by the mining sectors, the worst hit components on Monday.
The gold sector was up about 1.7 per cent after falling nine per cent Monday.
The base metals sector was up 2.83 per cent while May copper in New York gained a penny to US$3.28 a pound after falling eight cents on Monday in the wake of data showing that growth in China, the world’s second-largest economy, slowed to 7.7 per cent in the first quarter from 7.9 per cent in the final quarter of last year.
China has been a main pillar of support in helping the global economy recover from the recession caused by the 2008 financial collapse. Demand from China has helped lift commodity prices and in turn energy and mining stocks on the resource heavy TSX.
The energy sector was slightly higher while oil prices continued to falter amid concerns over the global economic recovery as the May crude contract on the New York Mercantile Exchange slipped 82 cents to US$87.89 a barrel. Suncor Energy (TSX:SU.TO) advanced 19 cents to C$27.69 and EnCana Corp. (TSX:ECA.TO) fell 32 cents to $18.89.