July 31, 2014 / 1:53 PM / 4 years ago

Argentine default, Valeant outlook fuel TSX selloff

TORONTO (Reuters) - Canada’s main stock index tumbled on Thursday after a default by Argentina stoked worries about other emerging-market economies, while shares of Valeant Pharmaceuticals International VRX.TO dropped sharply after the drugmaker cut its outlook.

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

Also unsettling the market, geopolitical tensions remained high as Russia announced measures to try to counter U.S. and European sanctions over Ukraine.

The pullback of the benchmark TSX index, which has been one of the strongest performers among global stock indexes this year, came after it hit a record high the previous session.

Argentina’s debt default was the country’s second in 12 years and came after hopes for a midnight deal with holdout creditors were dashed.

Investors were trying to gauge the effect of the news on broader financial markets and on other economies, and the uncertainty resulted in a spike in volatility.

“When something like Argentina comes out of left field, it rattles people,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

“It’s possible that we could see more downside, but it’s only in retrospect that we will find out if this signals the end of the bull market,” he added. “I don’t think anyone is calling for that yet.”

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 194.09 points, 1.25 percent, at 15,330.73. Nine of the 10 main sectors on the index were in the red.

Shares of energy producers gave back 1.8 percent. Canadian Natural Resources Ltd (CNQ.TO) lost 2.7 percent to C$47.53, and Talisman Energy Inc TLM.TO fell 3.8 percent to C$11.41.

Suncor Energy Inc (SU.TO) reported a drop in second-quarter profit late on Wednesday, and its shares shed 2.2 percent to C$44.77.

Valeant, embroiled in a battle to take over Botox-maker Allergan Inc (AGN.N), cut its full-year profit and revenue forecasts to reflect the sale of its rights to several skin-care products. The stock dropped 7 percent to C$127.83.

Open Text Corp OTC.TO reported a higher-than-expected 42 percent jump in quarterly revenue on Wednesday, largely driven by higher demand for its cloud services. Shares of the business software maker shot up 14.5 percent to C$60.64.

Editing by Chris Reese; and Peter Galloway

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