CANADA STOCKS-TSX drops for 3rd day as jitters gain the upper hand

Mon Apr 7, 2014 5:13pm EDT

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(Adds details, comments from strategist; updates prices)
    * TSX falls 122.77 points, or 0.85 percent, to 14,270.33
    * Eight of the 10 main index sectors decline
    * Potash Corp slips after it names its next CEO

    By John Tilak
    TORONTO, April 7 (Reuters) - Canada's main stock index fell
sharply on Monday, retreating for a third straight session, as
increasing nervousness about the durability of recent market
gains joined with sluggish commodity prices to drag down most of
the index's major sectors.
    Stock markets also were still digesting disappointment over
Friday's U.S. labor market data, which showed a gain in jobs in
March that fell short of market expectations. 
    Uncertainty about what the jobs figures would mean for
Federal Reserve policy and the timing of any U.S. interest rate
rise boosted market volatility, fueling a selloff in U.S.
stocks, and undermining the Canadian market, where insurers were
hit hard for a second straight session.
    The S&P/TSX VIX index, which gives a glimpse of
the level of market volatility, shot up 15 percent.
    "It's the spillover effect of weakness in the United
States," said Elvis Picardo, a strategist at Global Securities
in Vancouver. "It certainly seems like we're going to be in for
a sustained period of more volatility."
    Investors can no longer expect weeks to go by without any
significant decline, he added. "Those days are over."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed down 122.77 points, or 0.85 percent, at
14,270.33.
    The benchmark index is up about 4.8 percent this year.
    "If the market drops 6 percent or more, this is a huge
buying opportunity," said John Stephenson, senior vice president
and portfolio manager at First Asset Investment Management.
    He added that he does not expect a major correction,
however. "I don't think the market will drop more than 3 or 4
percent, either the TSX or the S&P 500."
    Eight of the 10 main sectors on the Canadian index were in
the red on Monday.
    Financials, the index's most heavily weighted sector, were
down 0.4 percent. Manulife Financial Corp gave back 2.2
percent to C$20.79, and Sun Life Financial Inc lost 2.3
percent to C$36.50.
    Oil prices dropped, dragging down shares of energy
companies. In the group, Canadian Natural Resources Ltd 
fell 0.8 percent to C$43.30.
    The materials sector, which includes mining stocks, declined
0.8 percent. Barrick Gold Corp shed 0.8 percent to
C$20.14.
    But some stocks benefited from a gain in the price of
copper. Shares of diversified miner Teck Resources Ltd 
jumped 1.2 percent to C$24.72.
    Potash Corp of Saskatchewan Inc said on Sunday that
former Inmet Mining Corp boss Jochen Tilk would become the
world's biggest fertilizer company's next chief executive
officer, replacing Bill Doyle. 
    Potash shares fell 1.9 percent to C$37.11.
    Magna International Inc said it will end
compensation to Frank Stronach at the end of this year, after
paying $52 million in consulting fees to the company's
billionaire founder in 2013. Shares of the auto parts maker gave
back 2.2 percent to C$104.81. 
    ($1=$1.10 Canadian) 

 (Editing by Peter Galloway)
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