Canada’s main stock index fell from record highs on Monday as fresh signs of weakness in the euro zone and worries about a U.S.-China trade deal kept investors on the sidelines, while shares in First Quantum Minerals Ltd slumped 9.7 per cent after the miner denied takeover talks.
First Quantum was the biggest decliner on the main index after it said it had no knowledge of any potential takeover bids but confirmed it was in talks with Jiangxi Copper for a potential sale of a minority interest in its Zambian copper assets.
The weakness came despite domestic data showing an unexpected jump in July wholesale trade on stronger sales in the personal and household goods subsector, as well as motor vehicles and parts.
Stocks globally took a hit from a survey that showed euro zone business growth stalled this month, raising fears of a global slowdown. Canadian financial stocks were down 0.4 per cent.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 32.49 points, or 0.19 per cent, at 16,867.20.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.6 per cent as gold futures rose to over a one-week high.
Leading the index were Turquoise Hill Resources Ltd., up 8.5 per cent, MAG Silver Corp., up 6.6 per cent, and Iamgold Corp., higher by 5.4 per cent.
Lagging shares were Osisko Gold Royalties Ltd., down 10.0 per cent and Hudbay Minerals Inc., lower by 5.0 per cent.
The U.S. dollar edged higher while global shares slid on Monday as euro zone equities clocked their worst day in a month after dismal business activity readings in Europe deepened fears of a looming recession there.
Bond yields across the euro area tumbled after German private sector activity shrank for the first time in 6-1/2 years in September as a manufacturing recession worsened and service-sector growth also lost momentum.
Growth also slowed unexpectedly in France, the only other euro zone country for which IHS Markit’s flash composite Purchasing Managers’ Index is published.
Germany’s DAX stock index fell 1 per cent to its biggest one-day fall since Aug. 23. The pan-European STOXX 600 index lost 0.80 per cent.
Copper prices fell to their lowest in 2-1/2 weeks on weak demand prospects, reinforced after U.S.-China trade talks failed to yield a breakthrough last week.
“Trade tensions between the two largest economies in the world are having an impact ... the dreadful manufacturing figures from Germany this morning is a great example of how the problem spills out beyond the U.S. and China,” said CMC Markets analyst David Madden in London.
Marc Chandler, chief market strategist at Bannockburn Global Forex LLC said the euro zone flash PMI dashed hope that the worst was past.
The euro zone economy is not showing convincing signs of a rebound and a persistent downturn in manufacturing puts at risk the rest of the economy, European Central Bank President Mario Draghi said.
MSCI’s gauge of stocks across the globe shed 0.22 per cent and its emerging markets index lost 0.60 per cent.
U.S. stocks barely budged, with gains in shares of Apple Inc offset by mixed economic data that added to caution over the prolonged U.S.-China trade war.
Apple Inc rose 0.46 per cent after U.S. trade regulators approved 10 out of 15 requests for tariff exemptions by the iPhone maker.
U.S. employment in the services sector shrank in September for the first time in 9-1/2 years, IHS Markit’s PMI showed. At 50.9 it was below expectations of 51.3. But data also showed manufacturing activity rose, topping expectations.
The Dow Jones Industrial Average rose 14.92 points, or 0.06 per cent, to 26,949.99. The S&P 500 lost 0.29 points, or 0.01 per cent, to 2,991.78 and the Nasdaq Composite dropped 5.21 points, or 0.06 per cent, to 8,112.46.
The dollar climbed, buoyant in recent months as its relatively high yield and a strong U.S. economy attracted investors.
The dollar index rose 0.11 per cent, with the euro fell 0.23 per cent to $1.0992. The Japanese yen strengthened 0.12 per cent versus the greenback at 107.46 per dollar.
Bond yields across the euro area tumbled after the weak business activity data. The yield on Germany’s benchmark 10-year bond fell to negative 0.59 per cent, its lowest since the ECB meeting on Sept. 12 concluded with rate cuts and fresh asset purchases to boost weak growth.
U.S. Treasury yields dropped in line with the European bond market. U.S. 30-year, 10-year and 2-year yields all fell to two-week lows.
The benchmark 10-year U.S. Treasury notes rose 10/32 in price to push its yield down to 1.718 per cent.
Crude oil futures stabilized after nearly a 7 per cent gain last week. Concerns about global supplies following the Sept. 14 attack on Saudi oil facilities offset prospects for quick restoration of the kingdom’s output and worries about a weak European economy.
Global benchmark Brent futures settled up 49 cents to $64.77 a barrel while U.S. West Texas Intermediate (WTI) crude rose 55 cents to settle at $58.64.
Worries about Europe helped lift gold to its highest in more than two weeks. U.S. gold futures settled up 1.1 per cent at $1,531.50 an ounce.
Reuters