Toronto market plunges 321 points, oil prices retreat on weak China data

Facade of the Toronto Stock Exchange (ShutterStock image)

TORONTO — The Toronto stock market plunged more than 300 points by late-morning Monday with energy stocks taking a pounding amid weak Chinese trade data and a report suggesting that already-depressed crude prices have a ways to go before finding a bottom.

The S&P/TSX composite index tumbled 321.42 points to 14,152.28 or 2.2 per cent on top of a slide of almost two per cent last week.

The Canadian dollar declined 0.15 of a cent to 87.32 cents US.

U.S. indexes were mixed with the Dow Jones industrials down 7.77 points to 17,951.02, the Nasdaq gained 7.22 points at 4,787.98 and the S&P 500 index slipped 0.87 of a point at 2,074.5.

Oil prices retreated in the wake of data showing that China’s exports rose by a weaker-than-expected 4.7 per cent, down from October’s 10.6 per cent. Imports were forecast to post a small increase but instead contracted by 6.7 per cent from a year earlier.

China’s economic growth slowed to a five-year low of 7.3 per cent in the latest quarter.

Also, Morgan Stanley analyst Adam Longson said that prices for Brent crude, an international benchmark, could fall to as low as US$43 a barrel next year. The U.S. investment bank cut its 2015 average price estimate for Brent by $28 to $70 per barrel, and its 2016 average by $14 to $88 a barrel.

“We’re going to continue to see volatility in oil prices and it’s going to react to near-term economic data and it will take us some time to work through the supply and demand imbalances that are in the energy market right now,” said Colum McKinley, Canadian Equities Manager at CIBC Asset Management.

A stronger American currency was also partly responsible for pushing January crude on the New York Mercantile Exchange down $2.02 to US$63.82 a barrel and the energy sector fell almost three per cent.

Crude prices have tumbled about 38 per cent since mid-summer on lower demand and a glut of supply, due in large measure to greatly increased production in the U.S. Midwest. Prices have also been depressed lately by OPEC’s decision to leave production levels unchanged while Saudi Arabia last week cut prices.

The energy sector fell almost six per cent Monday in addition to a five per cent plunge last week as the price of crude settled at a five-year low.

Sharply lower crude prices were reflected in revised capital spending plans by oilpatch companies.

Precision Drilling Corp. said Monday that it’s planning a $493-million capital budget for 2015, which will be down 44 per cent from what it’s currently planning for capital expenditures this year. Its shares fell 54 cents or 7.9 per cent to $6.31.

Vermilion Energy said its capital spending for 2015 will come in at $525 million, down 22 per cent from its planned 2014 spending. Its shares shed $3.64 or 7.4 per cent to $45.35.

Elsewhere, Citigroup cut its rating for Canadian Natural Resources to neutral and its shares fell $1.64 or 4.4 per cent to $35.50.

The base metals sector lost 3.5 per cent with March copper unchanged at US$2.90 a pound.

The gold sector inched up 0.2 per cent while February gold gained $3.30 to US$1,193.70 an ounce.

Financials also weighed on the TSX, down two per cent as bank shares continued to fall back following a mixed bag of earnings reports last week.