TSX lower to start holiday-shortened week; U.S. markets also down

TORONTO – The Toronto stock market turned lower Tuesday to start the holiday-shortened trading week as its heavily weighted metals and mining, energy and financials sectors all pulled back.

The S&P/TSX composite index lost 119.63 points to 13,844.73 after having been closed for Thanksgiving on Monday. The loonie was down 0.49 of a U.S. cent at 76.81 cents US.

The TSX metals and mining sector was down more than six per cent, while energy was down more than two per cent and financials declined 0.2 per cent.

Negative news affecting markets included yet another report out of China pointing to a continuing slowdown in the world’s second-largest economy, while another report from the International Energy Agency predicted lower global growth in oil demand next year.

“China makes up a huge part of the demand for base metals, so any weakness in Asia is going to have those negative ripple effects on many of the materials stocks,” said Craig Jerusalim, portfolio manager at CIBC Asset Management.

The November contract for benchmark crude was down 44 cents at US$46.66 a barrel, while November natural gas lost four cents to US$2.50 per thousand cubic feet. December gold rose 90 cents to US$1,165.40 an ounce while December copper gave back three cents to US$2.39 a pound.

In New York, where markets were open on Monday, the Dow Jones industrial average gave back 49.97 points to 17,081.89, snapping a seven-day winning streak on the widely watched index. The broader S&P 500 slipped 13.77 points to 2,003.69 and the Nasdaq retreated 42.03 points to 4,796.61.

“For anyone with a weak stomach, the volatility of this market is just not for them,” Jerusalim said, advising investors to tune out the short-term fluctuations and focus on stocks with solid earnings and profitability.

The IEA, in its oil market report for October, said global growth in oil demand is expected to slow from its five-year high of 1.8 million barrels a day in 2015 to 1.2 million barrels a day in 2016. That would be closer to its long-term trend as previous price support is likely to wane.

It said world oil supply held steady near 96.6 million barrels a day in September as lower non-OPEC production was offset by a slight increase in OPEC crude.

Meanwhile, there was another worrisome report out of China, this one showing imports by the Asian giant plunged 20.4 per cent in September from a year earlier to $145.2 billion.

That was worse than the 5.5 per cent decline in imports in August and more than the 15 per cent drop that had been expected by analysts. Exports contracted 3.7 per cent, although that was better than the 13.8 per cent decline in August.

Trade weakness has raised serious doubts about whether China can meet its seven per cent economic growth target for this year.

Follow @alexposadzki on Twitter.