The Toronto stock market declined Friday as commodity prices ease on concerns over Chinese moves to reform its industrial sector.
The S&P/TSX composite index fell 24.23 points to 12,644.91.
The Canadian dollar was off 0.1 of a cent to 97.33 cents US after running up almost 1/2 a US cent on Thursday.
U.S. indexes were also lower with the Dow Jones industrials down 65.66 points to 15,489.95, the Nasdaq composite index dropped 11.9 points to 3,593.29 and the S&P 500 index gave back 5.92 points to 1,684.33.
There are concerns that an overhaul of China’s industrial sector could cause a sharp slowdown in the world’s second-largest economy.
Beijing has ordered companies to close factories in 19 industries from steel to glass where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.
The gold sector fell 1.15 per cent while August bullion slipped $3.60 to $1,325.20 an ounce. Goldcorp Inc. (TSX:G) faded 33 cents to $28.52.
Other commodities were lower as demand concerns pushed the September crude contract on the New York Mercantile Exchange down 63 cents to $104.86 a barrel and the energy sector was off 0.17 per cent and Canadian Natural Resources (TSX:CNQ) dropped 29 cents to $33.41.
The base metals sector was slightly lower as September copper eased seven cents to $3.12 a pound. Hudbay Minerals (TSX:HBM) fell five cents to $6.97.
Financials also weighed on the TSX with National Bank (TSX:NA) down 40 cents to $78.08.
At the end of a heavy earnings week, TransCanada Corp (TSX:TRP) says it had $365-million or 52 cents per share of net income attributable to shareholders in the second quarter, up from $272-million or 39 cents per share a year earlier. On an adjusted basis, the Calgary based company had $357-million or 51 cents per share of “comparable earnings,” up from $300-million or 43 cents per share in the second quarter of 2012 and in line with analyst estimates and its shares were up 34 cents to 46.75.
Electronics manufacturing company Celestica Inc. (TSX:CLS) posted net income of $28.0-million, or 15 cents per share, up from $23.6-million, or 11 cents per share, a year earlier. Adjusted earnings were 21 cents a share, four cents better than analysts expected. The company knew it would take a hit from losing BlackBerry (TSX:BB) as a customer as a result of the smartphone company’s slimmed-down strategy. As it turned out, Celestica’s revenue was $1.495-billion (U.S.) – down 14 per cent from a year earlier but up three per cent if BlackBerry were excluded and its shares ran ahead 47 cents to $10.25.
After the close on Thursday, Amazon.com Inc. reported a surprise loss of $7-million, or two cents per share, in the April-June quarter. That’s down from earnings of $7-million, or one cent per share, a year ago. Revenue rose 22 per cent to $15.7-billion. Analysts, on average, were expecting earnings of five cents per share on revenue of $15.73-billion and its shares were down 1.3 per cent to $299.47 in New York.
The TSX looks set to end the week flat or even with a decline following weak earnings reports from the resource sector, in particular from Cenovus Energy (TSX:CVE) and PotashCorp (TSX:POT) in a reflection of falling commodity prices.
The telecom sector has also been negative this week, despite a strong earnings report from Rogers Communications (TSX:RCI.B) as investors mull the effects of a possible entry into the sector by U.S. telco Verizon Communications.
Bell has joined major telecom companies Rogers and Telus in calling for Ottawa to change its policy on foreign ownership of small Canadian wireless companies.
The three Canadian rivals say they have been put at an unfair disadvantage that allows foreign carriers like Verizon to buy small Canadian wireless carriers while denying them the same opportunity.
Traders were also cautious ahead of a slew of top tier economic data next week, topped off by a two day meeting of the U.S. Federal Reserve that will be closely watched for any clue as to when the central bank might be thinking of trimming a key element of economic stimulus. The Fed currently spends US$85-billion a month to buy bonds, a move that has kept long-term rates near record lows and supported a strong stock market rally.
But Fed chair Ben Bernanke has indicated the Fed could start cutting back on those purchases later this year if the economy improves sufficiently.
There are also reports on second-quarter gross domestic product, the health of the manufacturing sector and the week ends with the release of the U.S. non-farm payrolls report.
Earlier in Asia, China’s Shanghai Composite dropped 0.5 per cent and Japan’s Nikkei 225 index fell three per cent due to a big rise in the yen, which risks making the country’s exports less competitive on international markets.
Elsewhere in the region, Australia’s S&P/ASX 200 rose 0.1 per cent while Hong Kong’s Hang Seng was up 0.3 per cent.
European bourses were mixed with London’s FTSE 100 index down 0.34 per cent, Frankfurt’s DAX was down 0.53 per cent while the Paris CAC 40 gained 0.35 per cent.