Toronto's main stock index closed at its lowest level in seven months on Friday, dragged down by a sharp selloff in Research In Motion and sliding resource shares. RIM plunged more than 20 percent to C$27.24 after reporting disappointing results and forecasts late Thursday, prompting analysts to downgrade the BlackBerry maker's stock and cut price targets.
"I think RIM set the tone for Canada pretty much," said John Kinsey, portfolio manager at Caldwell Securities. "They disappointed pretty much everybody and it's certainly showing in the stock performance." Shares of Celestica, whose major customer is Research In Motion, slid 7.3 percent to C$7.91 after Paradigm Capital lowered its share price target on the contract electronics manufacturer.
Energy issues fell almost 1 percent, as US crude futures slumped on fears about Greece's debt crisis and a slowing US economic recovery. Suncor Energy - down 0.9 percent at C$37.17 - and Canadian Natural Resources - off 0.9 percent at C$37.99 - were among the heaviest laggards. "There really isn't much to cheer about," added Kinsey. "The bear market has taken hold here and it's got a pretty strong grip."
The Toronto Stock Exchange's S&P/TSX composite index ended down 63.18 points, or 0.49 percent, at 12,789.95. It was the weakest close since November 16. The index marked the 11th loss in 13 sessions this month. It was down 5.4 percent for the week and 7.3 percent for the month. Year to date, the TSX is almost 5 percent lower, and off more than 10 percent from the 2011 high reached in March.
Eight of the index's 10 main groups were lower, including technology, down almost 5 percent. Materials fell 0.4 percent, led by Potash Corp, the second heaviest decliner. It lost 2.8 percent to C$49.55. Financials also drifted lower by the close, falling 0.1 percent. Royal Bank of Canada however, remained the most influential gainer, climbing 1.2 percent to C$54.33, after reports said it may have found a buyer for its US retail banking operations.
Canadian National Railway was up 0.4 percent at C$73.41, making it the second most influential gainer on the index. The country's biggest railway rebounded after its shares fell on Thursday on news that it will sell assets of an indirect subsidiary and enter a 10-year coal transportation agreement. Earlier in the session, the TSX had rallied along with global investor sentiment after leaders of France and Germany said they were united behind a new aid deal to save Greece from default.
"It will be interesting if in fact they do come up with something on the weekend, then we might have a better day on Monday," added Kinsey. "I think the market liked what they heard but there wasn't enough concrete news to sustain it."
Also weighing on market confidence was data showing US consumer sentiment fell this month, while the IMF cut its forecast for US growth this year. Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, noted the TSX could have further to slide before hitting a trough and turning back around at the end of the summer or sometime in the fall. "If economic conditions improve, if Greece - some way or another people feel comfortable about the situation - and economic numbers start to do better, then I think we could rally," he said."