The Toronto stock market was negative in early trading Wednesday as commodities registered steep declines amid another indication of a slowing Chinese economy.
The S&P/TSX composite index fell 78.12 points to 12,378.38 as traders also took in earnings reports from the consumer and resource sectors and looked to what the U.S. Federal Reserve will have to say about the American economy at the end of its two-day interest rate meeting.
The Canadian dollar surrendered early gains and was down 0.17 of a cent to 99.18 cents US. The American currency had earlier been lower ahead of the Fed announcement. Markets have become increasingly convinced that the U.S. central bank is in no hurry to end its current stimulus programs amid a combination of low inflation and modest U.S. economic growth.
U.S. markets were weak amid signs of weak job growth in the United States. Payroll firm ADP released employment data that indicated another month of weak job creation. ADP said private sector job creation came in at 119,000 in April, much lower than expectations of 150,000.
The report came out two days before the release of the U.S. government's employment report for last month. Job growth in March widely missed expectations, coming in at 88,000.
The Dow Jones industrial average was off 47.03 points to 14,792.77, the Nasdaq composite index fell 7.45 points to 3,321.34 and the S&P 500 index gave back 5.78 points to 1,591.79.
Traders also looked to the release of the closely watched manufacturing survey from the Institute for Supply Management.
Slowdown in Chinese manufacturing
Commodity prices were lower after data showed a slowdown in China's manufacturing growth.
The China Federation of Logistics and Purchasing, an industry group, released data Wednesday showing that manufacturing grew at a slower pace in April and that export orders had been declining steadily. The federation's purchasing managers' index fell to 50.6 in April from 50.9 in March.
The metals and mining sector led decliners, down almost three per cent as June copper fell 10 cents to US$3.09 a pound. China is the world's biggest consumer of the metal. First Quantum Minerals, which posts earnings Wednesday, fell 63 cents to C$16.96.
The gold sector was also down almost three per cent as June bullion in New York dropped $20.10 to US$1,452 an ounce. Goldcorp Inc. faded 70 cents to C$29.12.
The energy sector fell 1.5 per cent as June crude contract on the New York Mercantile Exchange lost $2.75 to US$90.71 a barrel. Canadian Natural Resources lost 38 cents to C$29.17.
Canadian Oil Sands Ltd. posted net income for the first quarter of $177 million, or 37 cents per share, down from $318 million, or 66 cents per share in the same period a year earlier. That missed the average analyst estimate of 41 cents per share, according to Thomson Reuters and its shares shed 15 cents to $19.64.
Talisman Energy posted a quarterly net loss of $213 million, or 21 cents per share, in the first quarter, compared with a profit of $291 million, or 28 cents per share, a year earlier.
The company's cash flow fell 39 per cent to $517 million and its shares gave back 53 cents to $11.55.
The tech sector was also weak with BlackBerry down 45 cents to $16.05.
Loblaw earnings jump
Elsewhere on the earnings front, Loblaw Companies Ltd. jumped $2.02 to $44.77 as it reported a 40 per cent increase in first-quarter net income to $171 million or 61 cents per share, up from $122 million or 43 cents in the year-earlier period as revenue rose to $7.2 billion from $6.94 billion. The grocer is also increasing its quarterly dividend to 24 cents per common share from 22 cents and added it plans to compete the initial public offering of its real estate investment trust in early to mid-July.
The Jean Coutu Group Inc. (TSX:PJC.A) earned a net profit of $53.6 million or 25 cents per share in the latest period. That was down from $62 million or 28 cents per share a year ago. Revenue at the Quebec-based operator of more than 400 franchised drug stores in Quebec, Ontario and New Brunswick slipped to $682.7 million from $727.2 million. Its shares declined 45 cents to $16.30.
In the U.S., drugmaker Merck & Co. reported net income was $1.59 billion, or 52 cents per share, down from $1.74 billion, or 56 cents per share, a year earlier.
Adjusted earnings were 85 cents per share, a nickel more than analysts expected. Revenue totalled $10.67 billion, down from $11.73 billion. Analysts had expected $11.11 billion and its shares dropped $1.35 to US$45.64..
The TSX added to a string of solid gains Tuesday, jumping 144 points, thanks in part to strong earnings from Suncor Energy and business technology company CGI Group Inc.
Overseas, several major exchanges were closed for the May 1 holiday.
Tokyo's Nikkei 225 index fell 0.4 per cent.
In Europe, London's FTSE 100 index rose 0.38 per cent ahead of the European Central Bank's interest rate announcement on Thursday.
Market expectations have risen in recent days that the ECB will cut its key rate from its current record low of 0.75 per cent because of fears that the eurozone economy isn't recovering.
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