Canada's main stock market finished lower on Friday as natural resource stocks slumped and market sentiment soured following US economic growth data that fell short of expectations. US gross domestic product expanded at a 2.5 percent rate, an increase from the fourth quarter's dismal 0.4 percent pace but shy of the 3 percent growth analysts were hoping for. The weaker-than-expected data in Canada's biggest trading partner weighed on Canadian stocks.
The overall materials group, home to mining companies, gave back 3.1 percent, while the energy group fell 1.1 percent. Together, the two resource sectors make up some 40 percent of the index's weight. Goldcorp Inc had the biggest negative drag on the index with its 4.2 percent slide to C$29.29. Barrick Gold Corp, which reported lower quarterly profits this week, was down 3.3 percent at C$18.81. Base metal mining company First Quantum Minerals Ltd plunged 7.4 percent to C$16.67.
The price of gold, which posted its biggest weekly gain in three months, finished lower as investors took profits ahead of the three-day May Day holiday in China. China is the second-largest gold consumer after India. Copper prices retreated on the disappointing US data, following two days of gains.
"A lot of Asia's closed next week, so all the gold guys got nervous again today," said Paul Hand, managing director at RBC Capital Markets, who also noted the "outsized influence" commodities had on the Canadian stock market. "I think if you look at the broad mood of the investors in Canada, the underperformance of the index this year versus the US and/or some of the global markets is really quiet evident."
The Toronto Stock Exchange's S&P/TSX composite index closed down 109.31 points, or 0.9 percent, at 12,220.20. The index advanced 1.3 percent for the week. Eight of the index's 10 key sectors were mired in negative territory. Canadian Natural Resources slipped 2.1 percent to C$29.58. Oil prices were pressured by caution over the tepid growth outlook for the world's two largest oil consumers, the United States and China.
"We seem to be in a euphoria and then reality sets in and the fact is, the commodities continue to be top of mind. Even though they've recovered ... they can't gain any traction or momentum or any investor favour," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services. "No question the market wants to see higher commodity prices and see them sustained at a higher level, until they get back in."
Schwartz said prices of commodity stocks have disconnected from the underlying commodities they sell. "You can't force people to buy them, but some of the valuations are starting to look very, very attractive," he added. The financial subindex, which make up just over 30 percent of the main index's weight, was down 0.3 percent, led by Royal Bank of Canada, which was down 0.8 percent, at C$60.02.
In corporate results, Transcanada Corp, Canada's No 2 pipeline company, reported higher quarterly earnings and said the long wait for US government approval of its controversial Keystone XL project will further delay completion of the pipeline and push its cost above the company's $5.3 billion estimate. Shares fell 1.3 percent to C$49.14.
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