TORONTO (CP) — The Toronto stock market posted a triple-digit decline on Wednesday as indications of a further weakening in China’s economy contributed to a big drop in crude oil prices.
The S&P/TSX composite index ended the day down 107.40 points at 13,383.69 after tumbling 288.35 points, or more than two per cent, on Tuesday.
In New York, the Dow Jones industrial average closed down 50.58 points at 16,279.89 after an almost 180-point drop Tuesday, while the broader S&P 500 index gave back 3.98 points to 1,938.76 and the Nasdaq edged down an identical 3.98 points to 4,752.74.
Manulife Asset Management managing director Philip Petursson said markets are reacting to a tempering in global growth and looking for the best way to react to a stumbling Chinese economy.
“The market continues to try to assess how broad this slowdown is,” he said.
On commodity markets, the November crude contract fell $1.88 to settle at US$44.48 a barrel while the October contract for natural gas was unchanged at US$2.57 per thousand cubic feet.
The December gold contract rose $6.70 to US$1,131.50 an ounce, while December copper was flat at US$2.30 a pound after tumbling nine cents on Tuesday.
Petursson said commodities have been dealing with flat demand and oversupply as the slowing global economy hits both sides of the economic equation.
“It’s kind of a double whammy.”
The commodity-sensitive Canadian dollar slid 0.51 of a U.S. cent to 74.92 cents US.
Petursson said that despite today’s fall the downward pressure on the dollar is easing as the price of oil stabilizes after a 14-month slide.
“We’re near the bottom, there’s much less downside than we’ve seen over the past year,” he said.
The heavily weighted TSX energy sector was among the leading decliners on the index, falling 2.24 per cent.
The capped metals and mining and the raw materials sectors were the two biggest losers on the TSX after a new report indicated manufacturing in China has hit its lowest level in six years.
The preliminary Caixin/Markit index, which is based on a survey of factory purchasing managers, fell to 47.0 in September from 47.3 in August. Numbers below 50 on the 100-point index indicate contraction.
It’s the sixth straight monthly decline for the index, which is at its lowest since March 2009 when the world was gripped by the fallout from the global financial crisis.
The news hammered equity markets across Asia, with China’s Shanghai Composite Index dropping 2.2 per cent. Hong Kong’s Hang Seng sank 2.3 per cent and South Korea’s Kospi fell 1.9 per cent.
In corporate news, Volkswagen CEO Martin Winterkorn stepped down Wednesday, taking responsibility for a growing scandal over the automaker’s admission that it rigged software in its diesel-powered cars to pass U.S. emission tests.
Peter Henderson, The Canadian Press
