N.A. markets take a breather, World Bank cuts growth forecast
A Toronto Stock Exchange ticker is seen at The Exchange Tower. (The Canadian Press/Aaron Vincent Elkaim)
Linda Nguyen , The Canadian Press
Published Wednesday, June 11, 2014 8:50AM EDT
Last Updated Wednesday, June 11, 2014 2:39PM EDT
TORONTO -- North American stock markets were lower Wednesday as the indexes took a breather from the near record levels hit in the last few sessions.
The S&P/TSX composite index pulled back 46.43 points to 14,857.95. The Canadian dollar gained 0.35 of a cent to 92.06 cents US.
There have been predictions that the Toronto market might soon reach its record close of 15,073 set on June 18, 2008, just before the recession that saw stock values plummet. But that may not be the case as the TSX searches for direction in the face of little economic data or earnings news.
In the U.S., the Dow Jones industrials dropped 119.57 points to 16,826.35, the Nasdaq fell 20.02 points to 4,317.95 and the S&P 500 dipped 10.06 points to 1,940.73. The Wall Street indexes have been on a steady climb since April due to a number of encouraging economic reports, including solid jobs figures for May that were released last week.
The World Bank has said it plans to cut its 2014 global growth forecast to 2.8 per cent from 3.2 per cent, citing a bitter American winter and the political crisis in Ukraine. However, recent data such as solid U.S. hiring and stronger Chinese exports in May suggest prospects for growth in the second half of the year aren't all pessimistic.
On commodity markets, the July crude contract on the New York Mercantile Exchange was down three cents to US$104.32 a barrel ahead of a meeting by the Organization for Petroleum Exporting Countries. The group, which is meeting in Vienna, is expected to keep its output target of 30 million barrels a day unchanged.
Energy markets were also affected by Al Qaeda-inspired militants who overran much of the Iraqi city of Mosul on Tuesday. Mosul is a major gateway for Iraqi oil.
August bullion climbed $1.30 to US$1,261.40 an ounce as the TSX gold sector led advancers with a 0.72 per cent jump. July copper declined by a penny to US$3.04 a pound, with the TSX metals and mining sector fading 0.90 per cent.
The telecom sector was one of the biggest decliners, falling 1.18 per cent. Shares in Bell Aliant dropped 2.52 per cent, or 73 cents, to $28.27, while Rogers Communications stock declined by 2.24 per cent, or $1, to $43.70.
Allan Small, a senior adviser at Holliswealth, said the negative news from the World Bank and Iraq, have also given North American markets an excuse to take a "bit of a pause" to come down from their near all-time highs.
"What we're going to see going forward is more of what we've seen so far... sort of a grind higher," he said. "I would be surprised to see the TSX get a significant jump."
Small anticipates oil and gold to eventually come down, which will weigh on the commodities-heavy TSX. But because other sectors like banks and railways have been pretty stable, the overall effect on the exchange won't be too drastic.
"There's your balance," he said. "We'll see a lot of sideways trading going forward."
On the corporate front, the founder of Lululemon yoga wear wants a shakeup among board members at the company he founded. Chip Wilson voted against the re-election of two board members, saying a change is needed to increase shareholder value. Lululemon Athletics Inc. (Nasdaq: LULU) was holding its annual shareholders' meeting in Vancouver on Wednesday and reports its latest earnings results on Thursday. Its shares dropped $1.27 or 2.8 per cent to US$44.21 in New York.