The resource-heavy TSX opened with triple-digit losses, stung by big declines in major commodity prices this morning and a report showing the biggest drop in U.S. retail sales in nine months.
In early trading, the S&P/TSX composite index was down 132 points, or 1 per cent, at 12,347. In the U.S., the major indexes backed away from the record highs hit Thursday - but losses weren't nearly as harsh as in Canada. The Dow was down 32 points or 0.2 per cent, and the S&P 500 was down 7 points, or 0.4 per cent.
Gold was losing a lot more of its lustre, with futures down by about 1.9 per cent at $1,535.80 an ounce in New York, the lowest level in 15 months. There was a lot of technical selling in the precious metal, further encouraged by a strong U.S. dollar against the euro this morning. Heavy stop-loss orders were triggered on the move - automatic sell orders that kick in at certain chart points.
Other commodities were suffering big time, too. Crude oil was down 2.2 per cent, with losses largely tied to demand concerns - which were heightened after think-tanks this week lowered their consumption forecasts. Base metals were also weaker, with copper down 1.7 per cent.
The economically sensitive commodities, and the broader market, were in part reacting to the negative U.S. retail sales report, which saw March figures falling by 0.4 per cent. Economists had expected activity to be unchanged. The latest U.S. consumer sentiment survey today also was worrisome, hitting a nine-month low of 72.3 - well below forecasts of 79.
And a couple of key U.S. bank earnings this morning also weren't particularly well received, in part because they showed pressure on margins. JPMorgan Chase & Co. and Wells Fargo & Co. both beat expectations for their first-quarter profits, but revenues came up short. JPMorgan shares opened down 1.3 per cent and Wells Fargo down 2 per cent, and most U.S. financial stocks were lower in sympathy.
This week's rally to fresh record highs in the Dow and S&P 500 have made the indexes vulnerable to a pullback if signs emerge of a worse-than-expected slowdown in corporate earnings growth or in the economic recovery. Still, a lot of reluctant investors have placed more money into equities in recent weeks, helping to fuel the market's advance.
Overseas markets weren't setting an encouraging backdrop, with European indexes quite deep in the red amid more worries about Cyprus and the debt crisis in the region. Finance ministers for the euro zone are meeting in Dublin today, discussing loan extensions for Ireland and Portugal and the recent aid agreement for Cyprus.
A government official from Cyprus had reportedly said that the country would seek an increase in the €10-billion ($13-billion U.S.) in aid that European countries have promised, which sparked some knee-jerk selling in equity markets. But euro zone finance ministers later said there were no plans or requests to raise that amount. Instead, they said Cyprus is considering putting European Union structural funds to earlier use to help its stricken economy.
Germany's Dax index was down 1.4 per cent and France's CAC 40 down 1 per cent. Losses in London were more mild, with the FTSE 100 down 0.3 per cent.
Amid stocks moving on news was Research In Motion Ltd., which was up 2 per cent after falling by about 7 per cent on Thursday amid a research report claiming that returns of the new BlackBerry Z10 smartphones were exceeding sales in several cases. But RIM denies that, and this morning said it will ask both the the Securities and Exchange Commission and the Ontario Securities Commission to investigate why the research firm made such claims. CEO Thorsten Heins said in a statement that return rates are "at or below" RIM forecasts and "right in line with the industry."
Shaw Communications Inc. was down 1.1 per cent after reporting little growth in profit in its latest quarter.
Dollarama Inc. shares were up 3 per cent after the retailer reported adjusted earnings of $1.06 in its latest quarter, four cents better than estimates. It also raised its dividend.
Apple Inc. was down 0.4 per cent after RBC Dominion Securities cut its price target on the iPhone maker by $50 to $550, and warned the company's June quarter may disappoint. RBC said its checks found sluggish demand for the iPhone in March.