The Toronto stock market was off to a weak start Monday as a big disappointment in U.S. retail sales elevated worries about global economic conditions.
The S&P/TSX composite index lost 33.8 points to 11,480.73 and the TSX Venture Exchange was down 6.84 points to 1,180.12.
The Canadian dollar backed off 0.08 of a cent to 98.48 cents U.S. a day before the Bank of Canada makes its next scheduled announcement on interest rates. Economists expect the bank will leave its key rate unchanged at one per cent. Analysts will be looking at the tone of the bank’s accompanying statement for indications of when the bank might start to raise rates.
U.S. markets were negative as U.S. retail sales data for June came in much worse than expected. Sales slid 0.5 per cent versus the 0.2 per cent gain that had been forecast. The decline followed a 0.2 per cent dip in May.
The Dow Jones industrials dropped 57.07 points to 12,720.02, the Nasdaq composite index lost 12.28 points to 2,896.19 while the S&P 500 index declined 4.97 points to 1,351.81.
Traders also looked to a raft of U.S. corporate earnings statements that should shed more light on the state of the U.S. economic recovery.
Citigroup reported earnings which beat expectations. The bank said earnings excluding extraordinary items came in at $1 (U.S.) a share, versus expectations of 89 cents.
Revenues came in at $18.4-billion (U.S.), less than the $18.76-billion that analysts expected and its shares rose 2.25 per cent to $27.25.
Over the course of the week, around 90 companies listed on the S&P 500 are due to report earnings. They include Bank of America, Coca-Cola, Goldman Sachs, Google, IBM, Intel, Microsoft and Morgan Stanley.
Stock markets finished higher Friday in the wake of positive earnings from JPMorgan Chase & Co. and Wells Fargo Bank. Weak Chinese growth data raised hopes that officials will move to take further steps to stimulate the economy.
Stimulus hopes grew Monday after the International Monetary Fund cut its growth forecast for China’s slowing economy Monday and said a “hard landing” was still possible.
The IMF reduced its China growth outlook for 2012 by 0.2 percentage point to eight per cent and for 2013 by 0.3 point to 8.5 per cent. China’s second-quarter growth fell to a three-year low of 7.6 per cent as exports, consumer spending and factory output weakened.
Commodity prices were mixed after sharp runups in oil and copper at the end of last week.
The energy sector was slightly lower as the August crude contract on the New York Mercantile Exchange was up 16 cents to $87.26 (U.S.) a barrel. Canadian Natural Resources dropped 11 cents to $26.30.
The base metals group was the biggest decliner, down about one per cent as copper prices slipped two cents to $3.48 (U.S.) a pound. Teck Resources was 34 cents lower to $30.34.
The gold sector was little changed as bullion moved down $2.30 to $1,589.70 (U.S.) an ounce. Barrick Gold Corp. faded seven cents to $35.26.
The consumer discretionary segment was also weak with Tim Hortons stock down $1.91 or 3.56 per cent to $51.77.
Europe’s debt crisis will also remain near the top of markets’ concerns. In particular, investors will be awaiting details of Spain’s bank bailout. Later this week, eurozone countries are expected to give Spain €30-billion as part of a larger bailout for its banks.
Worries over Spain and the other indebted euro countries, have weighed on Europe’s single currency over the past few weeks.
European bourses were tepid with London’s FTSE 100 index slipped 0.03 per cent, Frankfurt’s DAX was off 0.14 per cent and the Paris CAC40 gave back 0.3 per cent.
Earlier in Asia, Hong Kong’s Hang Seng inched up 0.2 per cent, South Korea’s Kopsi rose 0.3 per cen, Australia’s S&P/ASX 200 added 0.6 per cent while China’s Shanghai Composite lost 1.7 per cent. Japan’s markets were closed for a public holiday.
In other corporate news, Research In Motion Ltd. lost 18 cents to $7.17 after a California jury ordered the troubled BlackBerry maker to pay $147.2-million to Delaware-based Mformation Technologies in a patent lawsuit. RIM said it is “disappointed“’ and is “evaluating all legal options.”
Jazz Aviation is getting $16.5-million in public money from the Nova Scotia government to expand its heavy maintenance base in Halifax. The five-year funding package for the subsidiary of Chorus Aviation Inc. includes a $2.5-million forgivable loan and $2-million to recruit and train new workers as well as upgrade the skills of current employees. Its shares were unchanged at $22.98.
ACE Aviation Holdings Inc. says it’s preparing to move its stock listing from Canada’s largest stock market to the NEX board of the TSX Venture Exchange. ACE is a Montreal-based holding company that was created in 2003 as part of the court-supervised restructuring of Air Canada. ACE is being dissolved now that its subsidiaries, including the airline, have been spun off or sold. ACE shares last traded July 13 and stood at $2.75.