Canadian shares dropped on Thursday, ending a four-day winning streak, as the manufacturing industry in China, the largest importer of Canadian commodities, unexpectedly shrank.
China manufacturing contracted in May for the first time in seven months. HSBC reported that its preliminary Purchasing Managers Index fell to 49.6 in May from April’s 50.4. Numbers below 50 indicate that activity is contracting. Analysts had predicted a more modest decline to 50.3.
The benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) declined 0.6 percent to 12,676.17 at 12:29 p.m. in Toronto on Thursday. Two shares declined for every stock that gained.
Nine of ten sectors fell. Financials, the main gauge's most heavily-weighted sector, gave up 0.9 percent, led by Toronto-Dominion Bank (TSE:TD), Canada’s second-largest lender by assets, which slipped 0.6 percent to C$83.49 after reporting worse-than-expected second-quarter results.
Net income for the three months that ended April 30 rose to C$1.72 billion, or C$1.78 a share, from C$1.69 billion, or C$1.78 per share, a year earlier, the Toronto-based bank said in a statement on Thursday. Excluding items including a C$58 million amortization charge, the bank earned C$1.90 a share, missing the C$1.91 a share predicted by five analysts. Revenue climbed 4.3 percent to C$6 billion, also trailing the C$6.07 billion anticipated by analysts on average.
The materials sector, which includes mining shares, slipped 0.4 percent. Teck Resources Ltd. (TSE:TCK.B), Canada’s largest diversified miner, fell 3.9 percent to C$28.30. First Quantum Minerals Ltd. (TSE:FM) edged down 2.2 percent to C$18.80 as base metal prices fell.
Kirkland Lake Gold Inc. (TSE:KGI) jumped 5.5 percent to C$4.45 and Kinross Gold Corp. (TSE:K) climbed 2.5 percent to C$6.06 as gold ended two days of losses on the back of its safe haven appeal.
Energy shares surrendered 0.5 percent. Suncor Energy Inc. (TSE:SU), Canada's largest energy company, gave back 1 percent as oil declined for a third day.
In other stocks, Nordion Inc. (TSE:NDN), the major provider of isotopes used in medical imaging, jumped as much as 9.3 percent to C$8.12 after saying it will sell its targeted therapies division to British pharmaceutical company BTG for $200 million.
In company news, Sherritt International Corp. (TSE:S), a Canadian mining and energy company with operations on four continents, is considering options including selling assets or restructuring the business to improve its value, Bloomberg News reported, citing Chief Executive Officer David Pathe. The shares slipped 0.8 percent to C$4.70.
The junior S&P/TSX Venture Composite Index (CVE:OSPVX) edged down 0.8 percent to 934.54.
In economic news, the number of Canadians receiving jobless benefits fell 1 percent in March from the previous month, Statistics Canada said on Thursday. The number of regular beneficiaries declined by 5,220 to 523,700. From the year-ago month, the total number of beneficiaries fell 8.1 percent, or by 46,390, the Ottawa-based agency said.
In the currency market, the Canadian dollar gained from a one-year low against its U.S. counterpart amid bets the Federal Reserve may not taper its monetary stimulus, known as quantitative easing, as soon as some investors anticipated. The currency climbed against the majority of its 16 most-traded peers. The loonie rose 0.2 percent to C$1.0343 per U.S. dollar at 11:04 a.m. in Toronto after touching C$1.0394, weakest since June 5, 2012. One loonie buys 96.68 U.S. cents.
In commodities, oil futures dropped for a third consecutive day on Thursday, as weak Chinese manufacturing data dulled prospects for energy demand and set prices up for their lowest close in three weeks. Crude for July delivery skidded 2 percent to $92.43 a barrel on the New York Mercantile Exchange.
In the metals markets, gold futures rose sharply on Thursday as the U.S. dollar weakened against the Japanese yen. Gold futures for delivery in June climbed 1.4 percent to sell for $1,385.90 an ounce on the Comex division of the New York Mercantile Exchange.
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