Gloomy global outlook pushes North American markets into decline

This is a file image of various stocks.

TORONTO -- Broad global concerns weighed on North American equity markets Thursday as investors questioned whether recent rallies have been justified amid see-sawing economic data.

The Toronto and New York stock markets sank into negative territory amid a pullback in financial, energy and base metal stocks as oil and copper prices retreated.

The S&P/TSX composite index lost 81.02 points to 13,266.44 as the May contract for benchmark crude oil shed 49 cents to US$37.26 a barrel after having risen more than five per cent the previous session.

The oil-linked Canadian dollar also resumed its recent slide, falling 0.29 of a U.S. cent to 76.08 cents US, its fifth decline in the last six sessions.

The volatility on stock markets reflects continued amid concern over global growth, particularly in the U.S., the European Union and China.

"The market has been parsing out the outlook between a global economy that is growing but certainly not as fast as we all would like," said Craig Fehr, a Canadian market strategist at Edward Jones in St. Louis.

"That's what is giving us this polarizing view from day to day, positive to negative, as the markets are interpreting the same type of data two different ways on two different days."

New York markets were also sharply lower, led by losses in banks and technology stocks amid a broad decline. The Dow Jones industrial average fell 174.09 points or 1.47 per cent to 17,541.96, while the S&P 500 was 24.75 points lower at 2,041.91. The Nasdaq composite shed 72.35 points or 1.64 per cent to 4,848.37

Fehr said the volatility of the last few weeks is reflective of pessimism over whether economies are growing as quickly as they should be amid an environment of low interest rates and stimulus from central banks.

"Global economic indicators are not firmly pointing in one direction or another. We are continuing to get a mix of positive and disappointing data," he said.

"Volatility will continue to persist as long as we get these back and forth indications with things like oil, central bank commentary and regional GDP figures from different parts of the world."

It other commodities, the May copper contract plunged seven cents to US$2.08 a pound while May natural gas surged 11 cents to US$2.02 per mmBtu.

Meanwhile, investors flocked to gold, boosting June bullion $13.70 to US$1,237.50 a troy ounce.

"Investors are starting to look more again at gold as the safe haven trade which means that on days where there is some stock market weakness, we are seeing a bit of a rebound in gold prices," Fehr said.