North American stock markets at the open joined global equities in a sell-off sparked by unease over automatic U.S. budget cuts set to kick in and weaker-than-expected economic data this morning out of Europe and Asia.
The TSX had the additional burden of significantly lower prices for economically sensitive commodity prices. Crude oil was down 1.4 per cent and copper was off 1.5 per cent. Gold wasn't seeing much haven buying, nearly flat in early trading.
The S&P 500 was down 11 points, or 0.7 per cent, at 1,504 and the Dow Jones industrial average was down 92 points, or 0.6 per cent, at 13,963. The S&P/TSX composite index was down 65 points at the open, or 0.5 per cent, at 12,756. European indexes were off earlier lows, but still lower, with Italy's FTSE MIB index down 1.8 per cent, Germany's DAX down 0.9 per cent and London's FTSE 100 down 0.3 per cent.
The Dow on Thursday came within 15 points of a record high before pulling back to close the session modestly lower. The retracement didn't have a clear catalyst, but with the U.S. budget cuts threatening to curb economic growth and a lot of market noise suggesting stocks are getting overextended, investors are growing increasingly cautious.
A barrage of economic data were released out of the U.S. this morning and results were mixed. U.S. personal income fell 3.6 per cent in January, the steepest slide in two decades, as higher tax rates kicked in. Even so, U.S. personal spending rose 0.2 per cent, which matched expectations. A final reading of the Markit manufacturing purchasing managers index fell to 54.3 in February from 53.1 in January, topping forecasts for a pullback to 52.5. Construction spending fell 2.1 per cent in January, compared with expectations that it would grow 0.5 per cent. And U.S. consumer confidence came in a little higher than economists' anticipated.
In the meantime, there's been little headway in efforts to avoid the $85-billion (U.S.) in spending cuts that officially starts kicking in tonight. The U.S Senate Thursday rejected a pair of partisan proposals to replace the automatic cuts. Today, President Barack Obama is meeting with Congressional leaders but no significant progress is expected.
In the U.K. today, a gauge of factory activity sank to 47.9, down from a revised 50.5 in January and well below expectations for 51, which would have signified expansion. Meanwhile, inflation in the euro zone in February fell and joblessness rose to an all-time high of 11.9 per cent, data showed.
In China, a purchasing managers' index eased to 50.1 after seasonal adjustments in February, the weakest reading in five months and just above the 50-point level separating growth from contraction on a monthly basis. January’s reading was 50.4. The data suggested economic growth this year in China would be mild.
Here in Canada, gross domestic product grew 0.6 per cent in the fourth quarter, in line with forecasts, but December’s output shrank by 0.2 per cent from the previous month, according to fresh figures today. The loonie this morning was down about one-tenth of a cent to 96.92 cents after hitting a fresh seven-month low earlier this morning.
Here's a look at some stocks moving on news this morning:
Global miner Rio Tinto has appointed investment banks Credit Suisse and CIBC to sell its majority stake in Iron Ore Company of Canada. The Wall Street Journall said an eventual price tag could be over $1.7-billion. There have been rumours that Teck had been pitched on a takeover of the company in recent weeks. Teck shares are down 2 per cent in early trading.
Talks between Best Buy Co. founder Richard Schulze have ended for a private takeover of the retailer after failing to line up debt and equity financing, Bloomberg News is reporting. Shares are up 5 per cent, however, after the company reported better-than-expected quarterly results.
Groupon shares are up 2 per cent after the company fired CEO Andrew Mason Thursday.
Magna International Inc. hiked its dividend 16 per cent and boosted its sales outlook. Shares are up nearly 2 per cent at th open.