Traders look at screens during a government bond auction on a trading floor in Madrid on Thursday. Spain sold €2.07-billion in government bonds in an auction that showed it still has access to markets, although its borrowing costs rose on worries about its banking sector and fiscal problems.ANDREA COMAS/Reuters
Canada's main stock index dropped to its lowest level in four weeks on Wednesday after the World Bank cut its global economic growth forecasts for this year and next, weighing on shares of most major sectors.
The Toronto Stock Exchange's S&P/TSX composite index was down 150.67 points, or 1.1 per cent, at 14,036.49. Eight of the 10 main sectors on the index were in the red.
Financials, the index's most heavily weighted sector, gave back 1.6 per cent. Toronto-Dominion Bank lost 2.5 per cent to $50.66, and Royal Bank of Canada declined 1.5 per cent to $75.56.
With oil prices staying under pressure, shares of energy producers fell 1.1 per cent. Suncor Energy Inc. dropped 1.4 per cent to $34.31, and Canadian Natural Resources Ltd. was down 0.9 per cent at $31.64.
U.S. markets were also negative Wednesday morning, with the S&P 500 down 18.52 points, or 0.92 per cent, to 2,004.51, the Dow Jones Industrials down 197.3 points, or 1.12 per cent, to 17,416.33 and the Nasdaq down 30.55 points, or 0.66 per cent, to 4,630.95.
The World Bank said it lowered its projections due to disappointing economic prospects in the euro zone, Japan and some major emerging economies.
Some mining shares were also hit hard by a dive in copper prices. First Quantum Minerals Ltd. shed 14 per cent to $11.58 and Teck Resources Ltd. tumbled 10.9 per cent to $13.06. The two stocks were among the most influential decliners on the index.
The Toronto stock market's benchmark TSX index has declined in each of the last four sessions and is down about 4 per cent since the start of the year.
"The technical picture has worsened. The (Canadian) market can continue to work lower in the near term," said Fergal Smith, managing market strategist at Action Economics.
"Set against evolving Federal Reserve monetary policy and big swings in commodity markets, volatility could remain elevated."
Economists weren't expecting a great reading on consumer buying for the end of last year. But results still ended up disappointing even the most pessimistic among them. U.S. December retail sales fell 0.9 per cent, against expectations for a 0.1 per cent drop, and the largest decline in about a year. This followed a 0.4 percent gain in November that was smaller than previously estimated
Worries about deflationary trends are gravitating investors towards the perceived safety of the bond markets, where the Canadian 10-year yield fell to a record low of 1.54 per cent after the U.S. retail sales data came out. The 30-year U.S. bond yield is also at its lowest ever, hitting 2.420 per cent.
Today's market action follows an especially active day of North American trading on Tuesday, when markets whipsawed from early-day triple-digit-point gains only to end lower - with little fresh news to account for it.
Crude oil prices today are hovering in above the nearly five-year lows reached Tuesday. Attention in the commodity world today has turned to copper, which is down about 5 per cent to more than five-year lows and had suffered staggering losses approaching 9 per cent overnight.
A downbeat World Bank global growth forecast appears largely to blame, as it is ratcheting up worries about the risks of deflation and demand for materials in the key consuming nation of China. The World Bank cut its forecast for global growth this year, citing deteriorating prospects in Europe, Japan and China. It now predicts the world economy will expand 3 per cent this year, slower than its earlier 2015 forecast of 3.4 per cent - although still up from growth of 2.6 per cent last year. It also cut its forecasts for 2016.
News on the earnings front isn't aiding sentiment this morning, as J.P. Morgan released weaker-than-expected profit numbers, while Wells Fargo appears to have met expectations.
Elsewhere, more signs are emerging that Europe is heading towards a full-scale quantitative easing-type program - though the latest developments are doing little to sooth market jitters. The European Court of Justice today said that the Outright Monetary Transactions bond-buying program - seen as a predecessor to quantitative easing - was acceptable under European Union law, with certain conditions. The European Central Bank meets on Jan. 22, in which it may announce the QE program.
With files from Reuters
Darcy Keith