The Toronto stock market was lower Thursday as a partial U.S. government shutdown, now in its third day, showed no signs of ending and traders worried the U.S. was heading for a big economic shock later this month.
The U.S. hits its debt limit Oct. 17 and the government will start to run out of cash on that date and could default on its debts.
The S&P/TSX composite index shed 15.01 points to 12,823.99.
The Canadian dollar was ahead 0.05 of a cent to 96.84 cents US.
U.S. indexes were lower as budget worries trumped data showing that layoffs have decreased dramatically.
The Dow Jones industrials dropped 65.12 points to 15,068.02 as the number of Americans seeking unemployment benefits rose just 1,000 last week to a seasonally adjusted 308,000. The less volatile four-week average for applications fell to 305,000, the lowest since May 2007, seven months before the recession began.
The release of the U.S. government’s September employment report had been scheduled for Friday. But the government shutdown has resulted in that release being postponed.
The Nasdaq was 6.87 points lower to 3,808.15 and the S&P 500 index gave back 6.75 points to 1,687.12.
Hopes had been high earlier in the week that Republicans and Democrats would come to a last-minute agreement prior to midnight Monday to avoid the shutdown, and then that the withdrawal of some services would be short-lived.
But now the worry is that the shutdown will carry on for another couple of weeks to the debt ceiling deadline.
At issue is the Affordable Health Care Act, or Obamacare, which the Republicans oppose.
Republican House Speaker John Boehner has made clear that curbing the health care overhaul that President Barack Obama pushed into law three years ago remains part of the price for ending the shutdown. Traders are concerned that price tag will also apply to raising the debt ceiling.
The health care segment led advancers. Valeant Pharmaceuticals International Inc. was ahead $1.46 to $114.84 after it said the U.S. Food and Drug Administration has approved a new Bausch + Lomb disposable contact lens sooner than expected. Bausch + Lomb was acquired by Valeant for about US$8.7 billion in August.
Commodity prices were mixed with December copper down four cents to US$3.28 a pound. The metals and mining sector turned up 0.5 per cent and Lundin Mining ticked five cents higher to C$4.62.
The energy group was slightly higher as November crude on the New York Mercantile Exchange gained 20 cents to US$104.30 a barrel.
The gold sector was flat while December bullion faded $9.70 to US$1,311 an ounce.
Techs led decliners with BlackBerry down 23 cents to $8.04.
Elsewhere on the economic front, investors will look to the Institute for Supply Management’s non-manufacturing index for a snapshot of the health of the services sector later in the morning The index is expected to slip to 57.5 in September from 58.6 in August.
“The threat of government shutdowns probably didn’t play too well on the minds of the service sector in September, and the actualization will likely lead to a pretty ugly print the next time around,” said BMO Capital Markets economist Alex Koustas.
Concerns over the U.S. government impasse obscured some positive economic news from the world’s second-biggest economy.
China’s official non-manufacturing Purchasing Managers’ Index rose to a six-month high of 55.4 in September from 53.9 in August.
The non-manufacturing PMI covers services including retail, aviation and software as well as real estate and construction sectors.
In other corporate news, Mike Wilson will retire as CEO of fertilizer company Agrium Inc. at year-end and pass the reins to the fertilizer giant’s chief operating officer. Chuck Magro had a long career at petrochemical company Nova Chemicals before taking on various leadership roles at Calgary-based Agrium. Agrium shares improved by $1.11 to $89.40.
WestJet says it had a greater proportion of empty seats on its flights last month as increases in the airline’s capacity outpaced its growth in passengers. The airline says its load factor in September was 76.6 per cent, down from 79.1 per cent a year ago and its shares declined 31 cents to $25.74.
European bourses were mixed with London’s FTSE 100 index up 0.49 per cent, Frankfurt’s DAX was ahead 0.09 per cent and the Paris CAC 40 was down 0.28 per cent.
Earlier, trading in Asia was mixed. Though Hong Kong’s Hang Seng rose one per cent, Japan’s Nikkei 225 index fell 0.1 per cent, Australia’s S&P/ASX 200 added 0.4 per cent.
Markets in mainland China and South Korea were closed for public holidays.
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