The Canadian stock market is trading solidly in negative territory Tuesday morning, extending the weakness from the previous trading session. Global markets are under pressure this morning after the release of weak manufacturing data from China.
Chinese manufacturers reported the sharpest deterioration in operating condition in more than six years in August and the service sector expanded at the slowest pace in the current 13-month sequence of growth.
The manufacturing Purchasing Managers' Index fell to 47.3 in August, which was the lowest reading since March 2009, survey data from Caixin Insight Group and Markit showed Tuesday. The sector has been contracting for six successive months. The reading was above the flash score of 47.1 but was down from 47.8 in July.
Markets in Europe are trading firmly to the downside after the disappointing Chinese report. Concerns over the slowdown in the Chinese economy is weighing on shares of mining and luxury goods companies especially. Meanwhile, manufacturing in the Eurozone showed only a slight decrease in August.
Markets in the United States are also trading in the red this morning, extending yesterday's weakness. Concerns over China weighed on sentiment in early trade and then U.S. manufacturing data unexpectedly fell to its lowest level since May of 2013.
Activity in the U.S. manufacturing sector unexpectedly grew at a slower rate in the month of August, according to a report released by the Institute for Supply Management on Tuesday, with the index of activity in the sector falling to its lowest level in over two years.
The ISM said its purchasing managers index dropped to 51.1 in August from 52.7 in July, although a reading above 50 indicates continued growth in the manufacturing sector. The decrease came as a surprise to economists, who had expected the manufacturing index to inch up to a reading of 52.8.
The benchmark S&P/TSX Composite Index is down 352.68 points or 2.54 percent at 13,506.44.
On Monday, the index closed down 5.95 points or 0.04 percent, at 13,859.12. The index scaled an intraday high of 13,888.19 and a low of 13,653.87.
The Diversified Metal and Mining Index is sinking by 5.22 percent. HudBay Minerals (HBM.TO) is losing 4.10 percent and First Quantum Minerals (FM.TO) is declining by 7 percent. Teck Resources (TCK-A.TO) is falling by 1.46 percent and Lundin Mining (LUN.TO) is lower by 4.92 percent. Sherritt International (S.TO) is also decreasing by 2.48 percent.
The Energy Index is tumbling by 3.94 percent. Crude oil prices turned lower Tuesday after a stunning rally over the previous few sessions.
Cenovus Energy (CVE.TO) is falling by 5.87 percent and Canadian Natural Resources (CNQ.TO) is lower by 4.52 percent. Encana (ECA.TO) is decreasing by 6.41 percent and Suncor Energy (SU.TO) is declining by 3.57 percent. Enbridge (ENB.TO) is losing 2.56 percent and Pacific Exploration & Production (PRE.TO) is down 7.85 percent. Canadian Oil Sands (COS.TO) is decreasing by 7.45 percent and Crescent Point Energy (CPG.TO) is weakening by 3.73 percent.
Bonterra Energy (BNE.TO) is surrendering 6.49 percent. The company announced that the monthly cash dividend for August will be $0.15 per share.
The heavyweight Financial Index is falling by 2.38 percent. National Bank of Canada (NA.TO) is decreasing by 2.22 percent and Bank of Nova Scotia (BNS.TO) is weakening by 2.66 percent. Bank of Montreal (BMO.TO) is losing 2.14 percent and Toronto-Dominion Bank (TD.TO) is down 1.94 percent. Canadian Imperial Bank of Commerce (CM.TO) is lower by 2.29 percent and Royal Bank of Canada (RY.TO) is declining by 2.24 percent.
The Capped Industrials Index is down 1.87 percent. Canadian National Railway (CNR.TO) is declining by 1.57 percent and AutoCanada (ACQ.TO) is falling by 4.83 percent. Bombardier (BBD-A.TO) is dropping by 3.55 percent and AutoCanada (AC.TO) is weakening by 3.92 percent. Finning International (FTT.TO) is also decreasing by 4.08 percent.
Canadian Pacific Railway (CP.TO) is losing 2.27 percent. The company announced the Toronto Stock Exchange approved the increase of the maximum number of its common shares that may be purchased for cancellation from 9,140,000 common shares to 11,937,181 common shares.
The Capped Materials Index is down 1.76 percent. Franco-Nevada (FNV.TO) is losing 0.86 percent and Agnico Eagle Mines (AEM.TO) is down 0.16 percent. Silver Wheaton (SLW.TO) is declining by 2.05 percent and Agrium (AGU.TO) lower by 2.04 percent. Potash Corp. of Saskatchewan (POT.TO) is also surrendering 1.20 percent.
The Capped Telecommunication Services Index is declining by 1.83 percent. TELUS (T.TO) is down 2.28 percent and BCE (BCE.TO) is losing 2.01 percent. Manitoba Telecom Services (MBT.TO) is falling by 0.95 percent and Rogers Communication (RCI-A.TO) is lower by 0.78 percent.
The Capped Health Care Index is weakening by 1.70 percent. Concordia Healthcare (CXR.TO) is declining by 1.58 percent and Extendicare (EXE.TO) is down 1.53 percent.
Valeant Pharmaceuticals International (VRX.TO) is lower by 2.61 percent. The company has entered into a collaboration agreement with AstraZeneca which grants it an exclusive license to develop and commercialize brodalumab.
The Capped Information Technology Index is losing 1.49 percent. BlackBerry (BB.TO) is decreasing by 2.10 percent and Descartes Systems Group (DSG.TO) is down 0.92 percent. Constellation Software (CSU.TO) is lower by 2.27 percent and Sierra Wireless (SW.TO) is declining by 2.51 percent.
The Gold Index is falling by 1.42 percent. Gold prices nudged higher Tuesday morning amid risk aversion as global stocks begin September with further declines.
Yamana Gold (YRI.TO) is lower by 1.62 percent and Kinross Gold (K.TO) is declining by 1.28 percent and IAMGOLD (IMG.TO) is weakening by 2.26 percent. Barrick Gold (ABX.TO) is down 0.44 percent and Eldorado Gold (ELD.TO) is lower by 0.76 percent. Goldcorp (G.TO) is also decreasing by 0.16 percent.
Fortis (FTS.TO) is surrendering 1.23 percent, after it has agreed to terms of a settlement with the Government of Belize regarding the Government's expropriation of Fortis' about 70% interest in Belize Electricity Ltd. in June 2011.
Penn West Petroleum (PNW.TO) is sinking by 10.68 percent. The company will reduce its total workforce by 35 percent. The Board has also decided to suspend dividend until further notice after October 15.
Alimentation Couche-Tard (ATD-A.TO) is gaining 1.63 percent. The company's first quarter adjusted earnings increased to $0.53 per share, from $0.48 a year ago.
On the economic front, data from Statistics Canada showed that real gross domestic product rose 0.5 percent in June. The increase in June was broad based, led by mining, quarrying, and oil and gas extraction and, to a lesser extent, wholesale trade, the finance and insurance sector as well as arts and entertainment. This was up from forecasts for an increase of 0.2 percent, following a 0.2 percent decline in May.
Eurozone unemployment rate unexpectedly dropped in July to its lowest level in three-and-a-half years, adding to hopes that consumer spending would support growth amid low inflation. The unemployment rate fell to 10.9 percent in July, after holding steady at 11.1 percent in the previous two months, data from Eurostat revealed Tuesday. The figure was expected to remain at the 11.1 percent level for a fourth straight month.
Germany's unemployment declined more than expected in August, reports said citing data from the Federal Labor Agency on Tuesday. The number of unemployed declined by 7,000 in August from July. Economists had forecast a decrease of 4,000.
Germany's unemployment rate held steady in July, figures from Destatis showed Tuesday. The jobless rate came in at an adjusted 4.7 percent in July, the same rate as in the previous month. In the corresponding month last year, the rate was 5.0 percent.
Eurozone factory expansion slowed marginally in August, while the pace was estimated to have remained unchanged earlier, final data from Markit Economics showed Tuesday. The purchasing managers' index for the manufacturing sector dropped to 52.3 from 52.4 in July. In the preliminary report, released earlier, the PMI score was shown to have held steady at the previous month's level.
Germany's manufacturing sector registered its fastest growth in 16 months in August, final data from Markit showed Tuesday. The Markit/BME final manufacturing PMI rose to 53.3 in August from 51.8 a month ago. The initial score for August was 53.2.
The French manufacturing sector contracted more than initially estimated in August, final data from Markit showed Tuesday. The manufacturing Purchasing Managers' Index fell to 48.3 in August from 49.6 in July. This was below the flash score of 48.6 and was the lowest in four months.
British manufacturing expansion slowed in August, defying expectations for a modest improvement, survey figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Tuesday. The purchasing managers' index fell to 51.5 from 51.9 in July. Economists had expected a score of 52.
U.K. mortgage approvals rose to a 17-month high in July, data from the Bank of England showed Tuesday. The number of mortgage approvals increased to 68,764 in July from 67,069 in June. It was the highest since February 2014, when it totaled 70,239 and also exceeded the expected level of 68,100.
In commodities, crude oil futures for September delivery are down $2.14 or 4.35 percent at $47.06 a barrel.
Natural gas for September is down 0.006 or 0.22 percent at $2.683 per million btu.
Gold futures for December are up $9.10 or 0.80 percent at $1,141.60 an ounce.
Silver for September is up $0.009 or 0.06 percent at $14.595 an ounce.
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