TORONTO – The Toronto Stock Exchange suffered another steep triple-digit decline on Tuesday afternoon as markets around the world were shaken by weak Chinese manufacturing data while a report from Statistics Canada confirmed the domestic economy fell into recession in the first six months of the year.
The S&P/TSX composite index plunged 377 points, or roughly 2.75 per cent at the closing bell, mirroring a similar downturn in New York.
The Dow Jones average and the broader S&P 500 index also dropped by 2.85 per cent and 2.96 per cent respectively. The Nasdaq fell by 2.94 per cent.
Statistics Canada data released Tuesday showed that Canada’s economy went into reverse in the first six months of 2015, the technical definition of a recession and the first time that has happened in six years.
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Yet there was some good news as the second-quarter drop was only half as steep as economists had predicted and there was evidence that the decline bottomed out in May as the economy actually grew in June, the final month of the second quarter after five monthly declines.
In Europe, major markets in London and Paris were down about three per cent at the end of their trading day. Earlier the Shanghai index, China’s largest, fell 1.2 per cent while Hong Kong stock markets and Japan’s Nikkei also closed lower.
Investors have been roiled by volatility in the Chinese markets, which kicked off a worldwide stock slump last month.
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The markets rebounded in the latter half of the week, but concerns persist about the health of the Chinese economy and its effect on demand for commodities and oil.
Ian Riach, senior vice-president at Franklin Templeton Investments, said the market has been dropping as forecasts for growth shrink all around the world.
“China’s getting the brunt of the blame for this, but I think it’s a little more dynamic than that,” he said.
Low interest rates have made investing in the stock market more attractive than other investments, he said, and may have led to improper valuations that are now being corrected.
The Canadian dollar was flat at 75.9 cents US after opening at 75.91.
On the commodity markets, the December gold contract rose $7 to US$1,139.50 an ounce, the October crude contract was down $3.29 at US$45.91 a barrel and the October contract for natural gas was down by a cent to US$2.68 per thousand cubic feet.
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