TSX down, miners back off amid tepid Chinese data; N.Y. up on Bernanke comments

TORONTO – The Toronto stock market closed lower Friday as mining stocks lost ground amid disappointing data from China.

The S&P/TSX composite index declined 45.34 points to 13,548.85 as traders also looked ahead to the start of the U.S. fourth-quarter earnings season next week.

The Canadian dollar rose 0.3 of a cent to 93.99 cents US.

New York indexes were mixed amid bullish comments on the American economy from outgoing Federal Reserve chair Ben Bernanke.

Bernanke says Americans’ finances have improved and the outlook for home sales is brighter. He also expects less drag from federal spending cuts and tax increases. Combined, those factors bode well for U.S. economic growth in coming quarters.

The Dow Jones industrials rose 28.64 points to 16,469.99, the Nasdaq dipped 11.16 points to 4,131.91 while the S&P 500 index edged 0.61 of a point lower to 1,831.37.

The coming week will see the first run of U.S. earnings reports trickle in from companies like resource heavyweight Alcoa Inc. on Thursday.

Bloomberg News says that U.S. earnings are expected to rise just 3.7 per cent in the fourth quarter, excluding financial companies.

Hopes are high that strong earnings can support the huge runup on U.S. markets last year, particularly after the Fed signalled last month that it is winding down a key area of stimulus.

The U.S. Federal Reserve ended months of speculation last month and announced it would be cutting back on its US$85 billion of monthly bond purchases. Those purchases are credited with supporting a strong rally on stock markets in 2013, including a 30 per cent surge in the S&P 500 to a record high.

Meanwhile, base metal prices backed off as China’s official non-manufacturing Purchasing Managers’ Index fell to a four-month low, coming in at 54.6 in December from 56 in November. A reading above 50 indicates expansion.

China is the world’s second-biggest economy and its double digit growth of the past and huge appetite for commodities had been a huge plus for a resource-based market like the TSX.

But traders have had to get used to a more modest growth rate of between seven and 7.5 per cent as the Chinese government keeps the lid on growth in order to keep inflation under control.

“The days of 10 per cent growth are gone and they’re gone mainly because the government doesn’t want it anyways,” observed Andrew Pyle, investment adviser at ScotiaMcLeod in Peterborough, Ont.

He added that there are concerns that growth could even go below seven per cent.

“China GDP growth going down below seven per cent would have a dramatic impact on resources in general, so it wouldn’t be just be base metals, it would be crude and everything else.”

North American markets got off to a lacklustre start to 2014 trading Thursday amid a slate of data showing manufacturing sectors in China, the U.S. and Canada still expanding but at a slower pace.

The base metals sector was down 1.4 per cent as March copper on the New York Mercantile Exchange lost three cents to US$3.35 a pound. Capstone Mining (TSX:CS) shed eight cents to C$2.92 while Teck Resources (TSX:TCK.B) lost 69 cents to $26.89.

The gold sector gave up early gains to post a loss of about one per cent as February bullion gained $13.40 to US$1,238.60 an ounce. Goldcorp (TSX:G) faded 42 cents to C$23.71.

Energy stocks also weighed on the TSX as crude fell six per cent this past week due to growing inventories in the U.S. and an expected recovery in Libyan production.

The energy sector lost 0.6 per cent as February crude on the Nymex fell $1.48 to US$93.96 a barrel. Canadian Natural Resources (TSX:CNQ) shed 32 cents to C$35.03.

Tech stocks were mixed with Celestica (TSX:CLS) ahead 11 cents to $11.12.

But BlackBerry (TSX:BB) shares lost 12 cents to $8.09 as it said that it is suing Typo Products, a company co-founded by TV personality Ryan Seacrest, saying that its new iPhone case rips off the famous BlackBerry keyboard.

Automakers also released December sales figures for the U.S.

Chrysler said its U.S. sales rose six per cent in the final month of the year and posted a nine per cent rise for 2013.

Ford’s sales for December in the U.S. rose 1.8 per cent, lower than the 5.9 per cent gain that was expected. Ford’s U.S. sales jumped 11 per cent in 2013 to nearly 2.5 million — a six-year high and its shares were seven cents higher to US$15.51.

General Motors’ December U.S. sales fell more than six per cent, but the company still finished the year with a 7.3 per cent increase. GM shares fell 3.37 per cent to $39.57.

North American markets closed little changed for the week with the TSX down 39 points while the Dow shed eight points.

Note to readers: This is a corrected story. A previous version incorrectly referred to certain U.S. companies as reporting financial results next week.