The Toronto stock market was sharply lower Thursday amid data showing the economic recovery in the European Union proceeding at a slower than expected pace and a disappointing outlook from retail giant and economic bellwether Wal-Mart stores.
The S&P/TSX composite index dropped 136.71 points to 14,537.02 in a broad-based decline.
The Canadian dollar was unchanged at 91.89 cents (U.S.).
U.S. indexes were deep in the red as the Dow Jones industrials tumbled 171.24 points to 16,442.73, leaving the blue chip barometer in negative territory for the year to date. The Nasdaq dropped 51.58 points to 4,049.05 and the S&P 500 index dropped 21.98 points to 1,866.55.
Wal-Mart earned $3.59-billion (U.S.), or $1.11 per share, for the period ended April 30, down from $3.78-billion, or $1.14 per share a year ago as bad winter weather kept shoppers away from its stores. Its performance missed Wall Street’s view, and on top of that, the world’s biggest retailer gave a second-quarter earnings forecast below analysts’ estimates. Wal-Mart’s stock fell 2.2 per cent to $77.02.
“Wal Mart is a market mover,” observed Stephen Lingard, Managing Director Franklin Templeton Solutions.
“The miss and their weak outlook is going to hit a market that is looking for excuses maybe to take profits after a nice rebound.”
And in Canada, Air Canada posted a quarterly net loss of $341-million (Canadian), or $1.20 per diluted share, as it was impacted by a lower Canadian dollar. That compares with a net loss of $260-million, or 95 cents a year earlier. On an adjusted basis, the airline reported a net loss of $132-million, or 46 cents per diluted share, compared with a net loss of $143-million, or 52 cents per share, year-over-year. Its shares slipped 15 cents to $8.07.
Meanwhile, Eurostat, the EU’s statistics office, said the economy of the 18 countries that share the euro saw economic output grew by only 0.2 per cent in the first quarter from the previous three-month period. Economists had expected a 0.4 per cent increase.
A large chunk of the blame for the underperformance can be placed on a flat performance in France, Europe’s second largest economy behind Germany.
The figures are likely to strengthen arguments for the European Central Bank to cut interest rates and take further stimulus measure at its next meeting June 5.
“It certainly seems like there is more support for more unorthodox sort of monetary policy out of Europe,” added Lingard.
“If anything they should have been talking about this a year ago.”
Elsewhere on the corporate front, Scotiabank wants to sell some or all of its 37 per cent stake in asset manager CI Financial Corp. That position, acquired in 2008, is worth about $3.8-billion and the bank believes it can more profitably deploy the capital elsewhere. CI Financial shares fell $1.98 or 5.5 per cent to C$34.15, helping take the financial sector down 0.65 per cent.
The energy sector fell 1.25 per cent as June crude on the New York Mercantile Exchange fell 79 cents to $101.58 (U.S.) a barrel.
July copper was down a penny at $3.15 a pound and the base metals sector eased 1.15 per cent.
The gold sector was down 1.35 per cent while June bullion dropped $5.80 to $1,300.10 an ounce.