TSX plunges 200 points in late morning trading as China worries weigh

Stockhouse Editorial
2 Comments| January 24, 2014


TORONTO _ The Toronto stock market was lower Friday amid worries about a slowdown in China's economy and fourth-quarter earnings in the U.S. that haven't quite met expectations.

The S&P/TSX composite index dropped 198.26 points to 13,734.71.

The Canadian dollar was ahead 0.18 of a cent to 90.28 cents US as Statistics Canada said the consumer price index for December rose 1.2 per cent on an annual basis, compared with 0.9 per cent in November, largely because of higher gasoline prices.

U.S. indexes registered a second day of sharp losses after data showed China's manufacturing sector unexpectedly moved into contraction territory during January. HSBC's purchasing managers' index for China dipped this month to 49.6, the lowest level since July. Numbers below 50 indicate contraction.

The Dow Jones industrials fell 185.67 points to 16,011.68 after plunging 176 points on Thursday, the Nasdaq was 41.28 points lower to 4,177.6 while the S&P 500 index was down 14.5 points to 1,813.96.

Also weighing on markets has been a slew of fourth-quarter earnings reports out this week that have disappointed on revenue growth.

At the same time, S&P Capital IQ says that 65 per cent of the first 102 companies to report have beat analysts expectations.

But investors are wary of a U.S. market that hasn't experienced a serious correction in almost 18 months while the S&P 500 soared about 30 per cent last year.

Another weight on markets is the U.S. Federal Reserve. Much of last year's rally was made possible by Fed stimulus in the form of massive bond buying. But the central bank announced last month it was cutting those purchases by US$10 billion a month to $75 billion.

The Fed holds its next interest rate meeting next week and traders will be anxious to see if the Fed reduces its asset purchases further.


Tags: GOLD

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illumination1
too much emphasis is placed on china and economic slowdown over there and yet people fail to realize the growth in places like brazil as well as other places in south america which is in truth outstripping china in both economic growth potential and not surprisingly population. the key being economics. i think people need to look beyond china albeit it is a very key market but not the only one. additionally, there is excellent growth in the middle east with a very young population--especially...
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January 24, 2014
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NobodyKnowsOne
I think the US based markets were looking for an excuse to punch some air out of their overbought positions. China just happens to be the flavour of the day.
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January 24, 2014
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