TSX Ends Lower As China Continues To Weigh -- Canadian Commentary

(RTTNews) - Canadian stocks plunged to end lower for second straight session on Tuesday, as the China factor continued to trouble global markets with some disappointing manufacturing data, interlaced with some disappointing economic news from the U.S. and Europe.

The Canadian market ended solidly in negative territory, with markets around the world under pressure after the release of some weak manufacturing data from China, highly suggestive of a slowing economy.

Chinese manufacturers reported the sharpest deterioration in operating conditions in more than six years in August, while the service sector expanded at the slowest pace in the current 13-month sequence of growth.

China's manufacturing Purchasing Managers' Index dropped to 47.3 in August, the lowest reading since March 2009, survey data from Caixin Insight Group and Markit showed Tuesday. The sector has been contracting for six successive months. The reading was above the flash score of 47.1 but was down from 47.8 in July.

Markets in Europe ended firmly to the downside after the disappointing Chinese report. Concerns over the slowdown in the Chinese economy is weighing on shares of mining and luxury goods companies especially. Meanwhile, manufacturing in the Eurozone also showed a slight decrease in August.

Markets in the United States also ended firmly in the negative territory, extending yesterday's weakness. Concerns over China weighed on sentiment in early trade and then U.S. manufacturing data unexpectedly fell to its lowest level since May 2013.

Activity in the U.S. manufacturing sector unexpectedly grew at a slower rate in the month of August, according to a report released by the Institute for Supply Management on Tuesday, with the index of activity in the sector falling to its lowest level in over two years.

The benchmark S&P/TSX Composite Index closed Tuesday at 13,481.90, down 377.22 points or 2.72 percent. The index scaled an intraday high of 13,691.80 and a low of 13,419.12.

On Monday, the index closed down 5.95 points or 0.04 percent, at 13,859.12. The index scaled an intraday high of 13,888.19 and a low of 13,653.87.

The Diversified Metals & Mining Index plummeted 7.23 percent, as First Quantum Minerals (FM.TO) plunged 10.50 percent, Teck Resources Limited (TCK-B.TO) dived 9.31 percent, Lundin Mining Corp. (LUN.TO) ended steeply down 8.50 percent, and HudBay Minerals Inc. (HBM.TO) surrendered 5.01 percent.

Sherritt International (S.TO) plunged 9.92 percent.

The heavyweight Financial Index dived 2.80 percent, as Bank of Montreal (BMO.TO) shed 3.18 percent and National Bank of Canada (NA.TO) surrendered 2.33 percent. Royal Bank of Canada (RY.TO) declined 2.74 percent.

Toronto-Dominion Bank (TD.TO) fell 2.40 percent, Bank of Nova Scotia (BNS.TO) fell 3.29 percent, and Canadian Imperial Bank of Commerce (CM.TO) dropped 2.25 percent.

Crude oil plunged to end sharply lower on demand growth concerns, after some disappointing economic data from China.

The Energy Index plunged 4.38 percent, with U.S. crude oil futures for October delivery, the most actively traded contract, plummeted $3.79 or 7.7 percent, to settle at $45.41 a barrel on the New York Mercantile Exchange Tuesday.

Among the major losers in the energy sector, Crescent Point Energy Corp. (CPG.TO) shed 4.74 percent, Canadian Natural Resources Limited (CNQ.TO) fell 4.35 percent, and Encana Corp. (ECA.TO) plunged 8.34 percent. Suncor Energy Inc. (SU.TO) dropped 3.25 percent, while Cenovus Energy (CVE.TO) dropped 6.66 percent.

Canadian Oil Sands Limited (COS.TO) plummeted 10.39 percent.

Gold futures ended higher with investors seeking the safe haven appeal of the metal after some some disappointing economic data from the China and the U.S., as well as the sharp sell-off witnessed in global equity markets.

The Gold Index shed 2.19 percent, with gold for December delivery gaining $7.30 or 0.6 percent, to settle at $1,139.80 an ounce on the New York Mercantile Exchange Tuesday.

Yamana Gold Inc. (YRI.TO) dropped 4.63 percent, while IAMGOLD Corp. (IMG.TO) plunged 5.88 percent.

Among other gold stocks, Barrick Gold Corp. (ABX.TO) fell 2.84 percent, Kinross Gold Corp. (K.TO) dived 4.68 percent, Goldcorp Inc. (G.TO) slipped 0.33 percent, and Eldorado Gold Corp. (ELD.TO) dropped 2.04 percent.

The Capped Materials Index fell 2.62 percent, as Agnico Eagle Mines Limited (AEM.TO) dipped 0.96 percent, Agrium Inc. (AGU.TO) shed 3.16 percent, and Potash Corp. of Saskatchewan Inc. (POT.TO) dropped 1.87 percent.

The Capped Health Care Index dropped 1.53 percent as Concordia Healthcare Corp. (CXR.TO) dipped 0.77 percent and Extendicare Inc. (EXE.TO) fell 0.51 percent.

Valeant Pharmaceutical International (VRX.TO) dropped 2.88 percent. The company has entered into a collaboration agreement with AstraZeneca which grants it an exclusive license to develop and commercialize brodalumab.

The Capped Information Technology Index surrendered 1.22 percent, as BlackBerry Limited (BB.TO) fell 2.71 percent.

Among other tech stocks, Sierra Wireless (SW.TO) fell 3.90 percent, while Descartes Systems Group (DSG.TO) edged down 0.18 percent. Avigilon Corp. (AVO.TO) gained 0.72 percent.

The Capped Telecommunication Index fell 1.83 percent, as Rogers Communication (RCI-B.TO) dropped 2.56 percent, BCE Inc. (BCE.TO) shed 2.27 percent, TELUS Corp. (T.TO) slipped 2.30 percent, and Manitoba Telecom Services Inc. (MBT.TO) edged down 0.18 per share.

The Capped Industrials Index shed 2.53 percent, even as Bombardier (BBD.B.TO) plummeted 9.30 percent and Finning International Inc. (FTT.TO) dropped 5.29 percent.

Bonterra Energy (BNE.TO) plunged 8.05 percent, after announcing a monthly cash dividend for August at $0.15 per share.

Canadian Pacific Railway (CP.TO) lost 2.87 percent. The company announced the Toronto Stock Exchange approved the increase of the maximum number of its common shares that may be purchased for cancellation from 9,140,000 common shares to 11,937,181 common shares.

Fortis (FTS.TO) is surrendered 1.15 percent, after agreeing to terms of a settlement with the Government of Belize regarding the government's expropriation of Fortis' about 70% interest in Belize Electricity Ltd. in June 2011.

Penn West Petroleum (PNW.TO) tanked 18.45 percent. The company will reduce its total workforce by 35 percent. The Board has also decided to suspend dividend until further notice after October 15.

Alimentation Couche-Tard (ATD-A.TO) gained 1.70 percent, after its first quarter adjusted earnings increased to $0.53 per share, from $0.48 a year ago.

On the economic front, data from Statistics Canada showed that real gross domestic product rose 0.5 percent in June. The increase in June was broad based, led by mining, quarrying, and oil and gas extraction and, to a lesser extent, wholesale trade, the finance and insurance sector as well as arts and entertainment. This was up from forecasts for an increase of 0.2 percent, following a 0.2 percent decline in May.

Elsewhere, the ISM said its U.S. purchasing managers index dropped to 51.1 in August from 52.7 in July, although a reading above 50 indicates continued growth in the manufacturing sector. The decrease came as a surprise to economists, who had expected the manufacturing index to inch up to a reading of 52.8.

Chinese manufacturers reported the sharpest deterioration in operating conditions in more than six years in August, while the service sector expanded at the slowest pace in the current 13-month sequence of growth.

China's manufacturing Purchasing Managers' Index dropped to 47.3 in August, the lowest reading since March 2009, data from Caixin Insight Group and Markit showed Tuesday. The sector has been contracting for six successive months. The reading was above the flash score of 47.1 but was down from 47.8 in July.

Eurozone unemployment rate unexpectedly dropped in July to its lowest level in three-and-a-half years, adding to hopes that consumer spending would support growth amid low inflation. The unemployment rate dropped to 10.9 percent in July, after holding steady at 11.1 percent in the previous two months, data from Eurostat revealed Tuesday. The figure was expected to remain at the 11.1 percent level for a fourth straight month.

Eurozone factory expansion slowed marginally in August, while the pace was estimated to have remained unchanged earlier, final data from Markit Economics showed Tuesday. The purchasing managers' index for the manufacturing sector dropped to 52.3 in August from 52.4 in July. In the preliminary report, released earlier, the PMI score was shown to have held steady at the previous month's level.

Germany's unemployment declined more than expected in August, reports citing data from the Federal Labor Agency said Tuesday. Unemployment in August declined by 7,000 from the July, even as economists had forecast a decrease of 4,000.

Germany's unemployment rate held steady in July, figures from Destatis showed Tuesday. The jobless rate came in at an adjusted 4.7 percent in July, the same as in the previous month. In the corresponding month last year, the rate was 5.0 percent.

Germany's manufacturing sector registered its fastest growth in 16 months in August, final data from Markit showed Tuesday. The Markit/BME final manufacturing PMI rose to 53.3 in August from 51.8 a month ago. The initial score for August was 53.2.

British manufacturing expansion slowed in August, defying expectations for a modest improvement, survey figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Tuesday. The purchasing managers' index fell to 51.5 from 51.9 in July. Economists had expected a score of 52.

The French manufacturing sector contracted more than initially estimated in August, final data from Markit showed Tuesday. The manufacturing Purchasing Managers' Index fell to 48.3 in August from 49.6 in July. This was below the flash score of 48.6 and was the lowest in four months.

U.K. mortgage approvals rose to a 17-month high in July, data from the Bank of England showed Tuesday. The number of mortgage approvals increased to 68,764 in July from 67,069 in June. It was the highest since February 2014, when it totaled 70,239 and also exceeded the expected level of 68,100.