Fears about oil glut and global banks trigger latest sell-off on TSX
Canadian energy and banking stocks were hit hard Tuesday as oil prices weakened and concerns mounted over the health of some international financial institutions.
The S&P/TSX composite index had plunged more than 300 points, or 2.4 per cent before regaining some ground. The index closed 252.8 points lower (2 per cent) at 12,282.65.
Shares in Royal bank of Canada and TD Bank were off more than 2 per cent, respectively, while energy stocks such as Suncor and Cenovus fell around 5 per cent apiece.
In New York, the major indexes traded lower as well but pared losses in the final hour to post only small declines Tuesday.
The Dow Jones industrial average was down 11.92 points at 16,015.13. The broader S&P 500 composite index declined 1.16 points to 1,852.28 by the closing bell.
Driving energy stocks lower was a further erosion in oil prices, with North American crude dropping more than 4 per cent to $28.49 a barrel U.S.
The drop in North American exchanges followed steep declines in Asia led by a 5.4 per cent slide in Tokyo, as renewed jitters about the global economy set off a wave of selling in banking stocks.
Equity markets have been in a slump so far this year after a lacklustre 2015. Several factors have kept investors in a selling mood, including falling crude oil prices, waning growth in China and increased risk of recession in other major economies if market volatility takes a toll on business confidence and investment.
“There is a genuine concern that stress in asset markets will start affecting real economics,” said Chris Weston, chief market strategist at IG in Melbourne, Australia.
“This period of sustained volatility and deterioration in credit will impact businesses and one has to be concerned about how many households are feeling this drawdown in the financial markets,” he said in a market commentary.