Worries about emerging markets weighed on the Toronto stock market again on Monday, as they did last week.
The S&P/TSX composite index lost 42.76 points to 13,652.18.
U.S. indexes were weak as data showing a slowdown in Chinese manufacturing added to concerns about countries such as Turkey, South Africa and India, all of which had to hike rates last week to support their currencies.
These countries and others have been hit by an outflow of investor funds as the U.S. Federal Reserve cuts back on its massive monthly bond purchases, a move that kept U.S. long-term rates low and resulted in a flow of cheap money into emerging markets.
But the primary worry is contagion from those countries.
“The recent turbulence in emerging market assets has sparked concerns around the impact of weakening emerging market growth on developed market growth,” said a commentary from Barclays Research.
“If the current emerging market stress does not intensify further . . . then we think the implications for (economic) growth in developed markets should be manageable.”
The Dow Jones industrials declined 7.26 points to 15,691.59, the Nasdaq slipped 0.12 of a point to 4,103.76 while the S&P 500 index was off 0.54 of a point to 1,782.05.
China’s official purchasing managers’ index showed the manufacturing sector continuing to expand during January but at a slower pace, coming in at 51.5, down from 52.5 in December. Any reading above 50 signals expansion.
Traders also awaited the release of the latest snapshot of the American manufacturing sector coming out mid-morning.
The major economic data for the week comes out Friday in the form of December employment reports for the U.S. and Canada.
Economists expect U.S. job growth of around 193,000 after a disappointing read of only 74,000, largely blamed on adverse weather conditions.
Statistics Canada was expected to report the economy created about 15,000 jobs after 44,000 positions were erased in December.
Commodity prices were unaffected by the Chinese data as HSBC’s manufacturing report from last week had already braced investors for another indication of a slowdown in the world’s second-biggest economy.
Base metal stocks led the TSX lower, down one per cent with March copper unchanged at $3.19 (U.S.) a pound after falling about 2.25 per cent last week.
The energy sector was down 0.45 per cent while March crude in New York dipped three cents to $97.46 (U.S.).
Husky Energy has given the green light to a $300-million equipment upgrade at its refinery in Lima, Ohio, so it can process heavy crude from Western Canada. Its shares headed 14 cents lower to $32.95 (Canadian).
The gold sector was slightly higher as risk-averse investors pushed April gold up $9.800 to $1,249.60 (U.S.) an ounce.
In other corporate news, Valeant Pharmaceuticals International is buying acquire American firm PreCision Dermatology in a friendly deal. Valeant will pay $475-million cash plus an additional $25-million when a sales-based milestone is passed and its shares gained 83 cents to $151.96.
European bourses were mixed with London’s FTSE 100 and Frankfurt’s DAX were off 0.3 per cent and the Paris CAC 40 was down 0.4 per cent.