A cut in China's official economic growth target triggered a triple-digit loss in Canada's benchmark stock index Monday, as concerns of a slowdown in one of the world's key economies triggered a skid that hit commodity-heavy equity markets.
Toronto's S&P/TSX composite index fell 119.87 points, or 1.0 per cent, to 12,523.95. In New York, the Dow Jones industrial average lost 14.76 points, or 0.1 per cent, to 12,962.81, while the S&P 500 lost 5.30 points, or 0.4 per cent, to 1,364.33. The Nasdaq composite index fell 25.71 points, or 0.9 per cent, to 2,950.48.
U.S. stocks had been showing deeper losses early in the day, but recovered most of their declines in the afternoon. The Canadian market wasn't so lucky, closing only modestly above its intraday lows.
China's premier, Wen Jiabao, lowered the country's official economic growth target 7.5 per cent, the lowest in eight years, from the long-standing target of 8 per cent - strong evidence that the country's economy has slowed and its government is struggling to manage a soft landing.
Since the country is seen as a key engine for global economic growth this year, the news weighed on equity markets throughout the world - but was especially hard on markets tilted toward commodity-based stocks, as China is a massive importer of natural resources and is seen as the key driver for demand growth in many commodities. About half of Canada's stock market is made up of resource stocks.
Investors globally were also nervous about the European debt situation, as concerns simmered that Greece would have trouble convincing sufficient private investors to accept its bond exchange.
On the other hand, investors got some good economic news out of the United States. The Institute for Supply Management's non-manufacturing index rose unexpectedly, to 57.3 in February from 56.8 in January, confirming strong growth in the services sector of the U.S. economy.
Toronto's declines were led by its two resource sectors - materials slumped 3.2 per cent and energy lost 1.8 per cent. In all, seven of the 10 major industry sub-indexes fell. The only sectors to scratch out small gains were traditionally defensive groups - telecoms, health care and consumer staples.
Despite the China and Greece concerns, prices for commodities themselves held up surprisingly well, with the Thomson Reuters/Jefferies CRB commodity price index slipping a modest 0.5 per cent.
Gold dipped $3.30 (U.S.) to $1,706.50 an ounce in New York. Crude oil was up 39 cents at $107.09 a barrel.
The Canadian dollar fell a half-cent to $1.0055 (U.S.).
On Tuesday, the markets will get a glimpse of the state of another key world economy, as the European Union reports gross domestic product numbers for the fourth quarter of 2011. Otherwise, it will be a pretty quiet day for economic data.