BUSINESS

Toronto stock market lower as direction of global economy questioned

09/18/2012 08:59 EDT | Updated 11/18/2012 05:12 EST
TORONTO - The Toronto stock market ended lower on Tuesday as a renewed sense of caution swept over traders concerned about the global economy.

The S&P/TSX composite index dropped 24.15 points to 12,422.71, following a slate of new reasons to be cautious, including signs of slower economic growth. The TSX Venture Exchange was up 5.48 points to 1,322.64.

The Canadian dollar was up 0.08 to 102.61 cents US.

The TSX information technology sector led gainers, up 1.21 per cent, with Research In Motion Ltd. (TSX:RIM) shares gaining 17 cents to $7.24.

RIM signed a patent licensing agreement Tuesday with Microsoft Corp. to use the software company's latest file system technology on its smartphones, making the handling of large files easier.

Metals and mining stocks were the biggest decliners, off 1.2 per cent, as Teck Resources (TSX:TCK.B) shares fell 52 cents to $31.26.

"I think it's a little bit of a pause after what's been a very strong run in equity markets," said Gary Aitken, chief investment officer at Bissett Investment Management.

"You saw that last week with a lot more willingness for investors to be taking risk. We've had a big run — markets don't go straight up — so I think some sort of pause is inevitable."

Commodity prices were lower with October crude ending the session off $1.33 to US$95.29 a barrel.

December copper was down less than a cent at US$3.79 a pound while December bullion rose 60 cents to US$1,771.20 an ounce.

On Wall Street, the Dow Jones industrials rose 11.54 points to 13,564.64, the Nasdaq composite index backed off 0.87 of a point to 3,177.80, while the S&P 500 index slid 1.87 points to 1,459.32.

Top of mind are concerns about the global economy, and a delay in Spain's acceptance of a financial aid package. The country's markets have improved in recent weeks on expectations that the government will get some form of rescue loan from the 16 other eurozone countries. But, Madrid has not made any formal request yet, likely wary of the conditions that would come attached.

The delay pushed the country's bond yields sharply higher on Monday, suggesting an increase in investor concern about the government's finances. The yields eased back somewhat on Tuesday after a bond auction was well-received. The sale of 12- and 18-month debt saw strong demand and resulted in lower interest rates than in the previous such auctions.

Meanwhile, U.S shipping giant FedEx, often considered a barometer of the global economy because it serves a broad slate of industries, added to the tensions after it said the global economy is worsening and cut its forecast again.

A report from TD Bank (TSX:TD) suggested the Canadian economy has hit a "soft patch" and growth will come in below two per cent for the rest of the year. The new forecast estimates growth has slowed to about one per cent during the current third quarter that ends on Sept. 30, making it the weakest three months of 2012.

Also on Tuesday, the U.S. Commerce Department reported that the current account deficit dropped 12.1 per cent in the second quarter. That's down from a record high in the January-March quarter. The deficit shrank because of an increase in American exports and cheaper oil. But economists are predicting it will grow again because of the global slowdown.

U.S. hedge fund Mason Capital Management said the B.C. Court of Appeal will hear its challenge of a ruling in favour of Telus (TSX:T, TSX:T.A). A lower court decision prevents Mason from holding a meeting for only Telus voting shareholders on Oct. 17, the same day that the telecom company plans a meeting for both classes of shareholders.

Mason is opposed to Telus's plan for eliminating its dual-class share structure without paying a premium to voting shareholders, including itself, to reflect the higher value of their shares on the market. Telus' voting shares rose 73 cents to $61.92, while the non-voting shares were up 71 cents at $61.50.

Apple's stock climbed to US$700 for the first time on Tuesday, setting a record for the company. The rise came a day after the technology firm announced that orders for its iPhone 5 topped two million in the first 24 hours. Apple closed up $2.13 at $701.91.