TSX selloff extends to 4th session as US jobs data discourages;NY also tumbles
TORONTO - Investors faced a fourth day of steep losses on the Toronto stock market as investor pessimism about economic conditions deepened.
"If you look at all the numbers, you have to say we have hell of a problem out there," said Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver.
"We have job losses that will continue, we have foreclosures increasing, a reduced demand for goods everywhere so you can make the dark case, no doubt about it. We're heading towards a global slowdown, that's my read of the tea leaves."
Stock markets around the globe also struggled as investors lost confidence in economic conditions, particularly after U.S. employment data further discouraged investors who had been hoping for a recovery.
The U.S. Labour Department reported the American economy shed a worse-than-expected 84,000 jobs and the unemployment rate jumped to 6.1 per cent from 5.7 per cent.
Toronto's S&P/TSX composite index was down 237.82 points to 12,576.32 amid a much better employment picture in Canada where Statistics Canada said the economy added 15,200 jobs last month. That followed a 55,000-job loss in July and left the unemployment rate steady at 6.1 per cent - the same as the new U.S. rate.
"While not exactly a picture of robust health, the decent August job gain helps to relieve some of the sting from July's big drop," commented BMO Capital Markets economist Douglas Porter.
"These results do not take away from the fact that Canada's labour market is cooling, but it certainly is not deteriorating at nearly the pace the U.S. job market is softening."
A commodity stock-led retreat on the Toronto market has carved about 1,100 points or 8.5 per cent from the main index this week.
Investors also took in news that bankruptcies were up 17.2 per cent in July compared with a year earlier.
The Office of the Superintendent of Bankruptcies said Friday there were 7,908 bankruptcies in July, mainly concentrated on individuals.
Personal bankruptcies were 6.3 per cent higher but business bankruptcies were down 1.9 per cent from June and 6.4 per cent below the level of July 2007.
The Canadian dollar was up 0.47 cent to 93.97 cents US following the job statistics.
The TSX Venture Exchange declined 43.11 points to 1,786.32.
New York's Dow Jones industrials were down 137.92 points at 11,050.31 after losing 345 points Thursday.
The Nasdaq composite index moved down 39.45 points to 2,219.59 and the S&P 500 index declined 18.8 points to 1,218.03.
The Toronto energy sector slid another 2.25 per cent as oil prices continued to lose ground while markets awaited next week's meeting of the Organization of Petroleum Exporting Countries. OPEC is seen as favouring a price above US$100 a barrel and could trim production targets to defend that level.
Light sweet crude was down $1.19 to US$106.70 a barrel on the New York Mercantile Exchange, after going as low as $105.76 overnight. EnCana Corp. (TSX:ECA) gave back $1.62 to $70.01 and Suncor Energy (TSX:SU) shed $1.97 to $50.90.
TSX financials were down 1.4 per cent, a day after Bill Gross, manager of Pacific Investment Management Co., the world's biggest bond fund, warned of a "financial tsunami." He said the U.S. Treasury must step up to replace private investors.
Anxiety was compounded by a downgrade of Merrill Lynch. Goldman Sachs analyst William Tanona put a "sell" rating on America's largest brokerage, citing expectations Merrill will incur further writedowns on top of $5.7 billion disclosed in July. Merrill shares fell back $1.01 to US$25.20.
In Toronto, Scotiabank (TSX:BNS) fell 97 cents to $46.35 and CIBC (TSX:CM) lost $1.44 to $61.57.
Laurentian Bank of Canada (TSX:LB) was a rare bright spot, up 20 cents to $39.29 after it said Friday its third quarter profit rose to $30.9 million from $23.2 million a year ago and increased its quarterly dividend by six per cent.
The industrials sector was also a major weight on the TSX, down over three per cent, with Canadian National Railway (TSX:CNR) $1.73 lower to $52.10.
Bombardier Inc. (TSX:BBD) has announced two new orders totalling US$236 million - one for railway equipment in Denmark and the other for turboprop airliners in Austria. Its shares lost 51 cents to $7.30 on top of a seven per cent slide on Thursday despite a positive earnings report.
Nokia Corp. was also a weight on markets after the world's largest handset maker warned its global market share will decline. Nokia stock fell $2.21 to US$20.10.
That news helped send the TSX telecom sector down one per cent. Telus Corp. (TSX:T) declined $96 to $40.51.
The gold sector was up slightly as the December bullion contract on the Nymex gained $9.80 to US$813 an ounce. Barrick Gold Corp. (TSX:ABX) advanced 49 cents to $33.03.
Overseas, Japan's Nikkei stock index closed down 2.75 per cent to 12,212.23. Hong Kong's Hang Seng index tumbled 2.2 per cent to 19,933.28 - below 20,000 for the first time in more than a year.
China's Shanghai index slid 3.3 per cent to its lowest close in 21 months.
By afternoon in Europe, Britain's FTSE 100 was down 106.8 points or two per cent to 5,255.3, and Germany's DAX and the Paris CAC 40 were both down about 2.5 per cent.
Mark Matthews, chief Asia strategist at Merrill Lynch, said markets have been hit hard as faith in the global economy has withered.
"People want to be confidant that the economy of the world can get better, and right now they don't have that confidence," Matthews said. "They think the global economy is still going to get worse."
In Canadian corporate news, Patheon Inc. (TSX:PTI) continued its turnaround effort with a net loss of $14.7 million in its latest quarter, improving from a year-ago loss of $63.1 million as revenue increased 18 per cent to $195 million. Its shares drifted 12 cents lower to $3.30.
Coalcorp Mining Inc. (TSX:CCJ) said Thursday it lost US$94.5 million for its most recent financial year as revenue grew by a third. Its shares added five cents to $1.30.
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