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TSX, U.S. markets fall amid moderate retail data from China and U.S

May 13, 2013 10:20 AM
BOE Report Staff

By Linda Nguyen, The Canadian Press

TORONTO – The Toronto stock market fell sharply Monday as prices for commodities, particularly gold, drove down the index amid data that showed slightly smaller-than-expected increases in China’s industrial production and retail sales.

The S&P/TSX composite index dropped 69.13 points to 12,519.96.

The Canadian dollar was up 0.14 of a cent to 99.03 cents US.

The U.S. commerce department reported that retail sales edged up 0.1 per cent in April, improving on the 0.5 per cent decline in March, the largest in nine months.

Economists had expected a contraction in the figures brought on by a higher U.S. tax on Social Security that kicked in this year, but the figures increased on a boost in spending on cars and clothing.

The Dow Jones industrial average was dropped 33.33 points to 15,058.96, the S&P 500 dipped 1.84 to 1,631.86, while the Nasdaq saw a small uptick of 0.5 of a point to 3,437.08 after being down for most of the morning.

Craig Fehr, a market strategist with Edward Jones, says that the resource-heavy TSX is falling on uneven economic data from China and the United States.

“The Chinese data and concerns about future growth out of China has really weighed on the commodities space,” said Fehr from St. Louis, Mo. “We’re going to get these periods where the market is going to pull back a little bit.”

He added that at this point, it’s difficult to predict if this the beginning of a downward market trend or a blip.

“We’re going to continue to get choppiness, largely because the economic data worldwide tends to be largely uneven. From day to day, we get these varying reports,” said Fehr.

“This choppiness in commodity prices is going to continue, because we haven’t seen a whole lot of momentum in one direction or another behind the global economy.”

Gold, oil and copper showed signs of weakness on last week’s gains.

The June crude contract was down $1.28 to US$94.76 a barrel, as the energy sector dipped by 0.78 per cent. EnCana Corp. (TSX:ECA.TO) fell 2.74 per cent or 53 cents to $18.79 per share.

The world’s markets have been on a high run as of late, due to hopes over the U.S. economy, signs that Europe’s debt crisis is easing and continued support by the world’s leading central banks.

Many indexes, including the Dow in the U.S. and Germany’s DAX, have struck a series of all-time highs in recent weeks, while others such as Japan’s Nikkei have hit multi-year peaks.

Overseas, the DAX fell 0.7 per cent to 8,222 while the FTSE 100 index of leading British shares was down 0.3 per cent at 6,405. The CAC-40 in France was 0.5 per cent lower at 3,936.

Australia’s S&P/ASX 200 rose 0.1 per cent to 5,210.30 and South Korea’s Kospi rose 0.2 per cent to 1,948.70. Hong Kong’s Hang Seng fell 1.4 per cent to 22,989.81.

The Shanghai Composite Index fell 0.2 per cent to 2,241.92. The smaller Shenzhen Composite Index rose 0.3 per cent to 974.20.

The main rosy story out of Asia was Japan’s stock market.

The Nikkei jumped to its highest close in more than five years after global finance leaders effectively backed the Bank of Japan’s stimulus program as a legitimate attempt by the country to get out of its two-decade era of stagnation.

On Monday, the Nikkei rose 1.2 per cent to 14,782.21, its highest close since December 2007. The index has soared more than 42 per cent since the beginning of the year.

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