GDP growth fails to move stocks, loonie
News that Canada's GDP expanded by an underwhelming 0.1 per cent in June was enough to send a chill through financial markets Monday, as both the loonie and the Toronto Stock Exchange took a tumble.
The benchmark S&P/TSX Composite Index was one per cent lower, down 109.76 to 10,868.21, at closing.
Statistics Canada released data showing the country's gross domestic product increased by 0.1 per cent in June. But the first monthly output increase in almost a year wasn't enough for investors to get excited, as economists had been expecting a 0.2 per cent gain.
"The strength and sustainability of the recovery remains an open question," BMO economist Doug Porter said.
The 0.9 per cent decrease in GDP for the quarter as a whole was better than the 1.6 per cent economists had been anticipating.
Worst contraction on record
There were a few nasty surprises buried in the GDP data. "The more surprising detail of the report was a massive 6.1 per cent plunge in the first quarter, revised down from 5.4 per cent," TD Bank economist Diana Petramala said. "This revision means that performance in the first quarter of 2009 went from the worst contraction since 1991 to the worst contraction on record."
The loonie closed at 91.32 cents US, down .26 cents, the Bank of Canada said at its website. Earlier in the day, the loonie had been as much as 1.26 cents lower, at 90.32 cents US.
The loonie has been on a downward trajectory since the Bank of Canada mused openly last week about implementing quantitative easing, an extreme monetary tool where the central bank buys government debt in an attempt to devalue the domestic currency.
The Toronto bourse's woes come on the heels of a poor start to the week in Asia. The Shanghai exchange shed 6.7 per cent while Hong Kong lost nearly two per cent.
Tokyo's Nikkei exchange was largely flat as investors sat on the sidelines after Japan's opposition party won landslide election victory on Sunday, ending more than 50 years of nearly unbroken rule by the Liberal Democrats.