At the open: TSX starts lower as oil slumps on disappointing China data

At the open: TSX starts lower as oil slumps on disappointing China data – Aug 15, 2022

Canada’s main stock index opened lower on Wednesday as oil prices tumbled after weaker-than-expected Chinese economic data clouded the outlook for the global economy.

At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 142.59 points, or 0.71%, at 20,037.22.

Miner Turquoise Hill Resources Ltd plunged 16% on rejecting an offer by majority shareholder Rio Tinto Ltd to buy the 49% stake it doesn’t already own for $2.7-billion

Wall Street’s main indexes opened lower on Monday, mirroring global markets, after weak economic data from China rekindled fears of an economic slowdown in the world’s second-largest economy.

The Dow Jones Industrial Average fell 50.35 points, or 0.15%, at the open to 33,710.70.

The S&P 500 opened lower by 10.78 points, or 0.25%, at 4,269.37, while the Nasdaq Composite dropped 50.56 points, or 0.39%, to 12,996.63 at the opening bell.

China’s central bank slashed key lending rates to revive demand as data showed the economy unexpectedly slowing in July, with factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.

U.S.-listed shares of China’s e-commerce giant Alibaba Group Holding Ltd and internet firm Baidu Inc declined more than 1% each in early trading.

Megacap growth and technology stocks such as Apple and Amazon began lower while banks also edged down after posting six straight weeks of gains.

“With the recent rally that we’ve had from the June lows, it just gives investors a reason to pause today,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

“I think the primary reason futures are down is because China surprisingly cut one of their key lending rates as economic news was a little bit weaker than expected.”

Oil stocks Exxon Mobil Corp, Chevron Corp, Halliburton Co and Marathon Oil Corp fell as crude prices tumbled on concerns over demand in China, the world’s largest crude importer.

U.S. benchmark crude oil shed $4.46 to $87.63 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.25 per barrel on Friday.

Brent crude oil, the basis for pricing for international trading, gave up $4.62 to $93.53 per barrel.

Wall Street has rallied over the last few weeks, with the benchmark S&P 500 index recovering half of its losses this year as optimism seeped back into markets following data that raised hopes the U.S. Federal Reserve can achieve a soft landing for the economy.

The S&P 500 and the Nasdaq posted their fourth straight week of gains on Friday even as Fed officials pushed back on expectations that the central bank will end its rate hikes sooner than anticipated, and economists warned that inflation could return in the coming months.

Meanwhile, analysts and advisers were optimistic that the move to delist five Chinese state-owned enterprises from the New York Stock Exchange could pave the way for Beijing to strike an audit deal with the United States, ending a more than decade-old dispute.

U.S.-listed shares of the five Chinese firms China Life Insurance Co Ltd, Sinopec, Aluminum Corp of China Ltd, PetroChina Co Ltd and Sinopec Shanghai Petrochemical Co Ltd extended Friday’s decline.

Reuters