TORONTO (Reuters) - Canada’s main stock index recorded its biggest single-day percentage drop in about 20 months, tumbling nearly 2.5 percent on Monday, as a deepening selloff in oil prices hit shares of energy companies.
Nine of the 10 main sectors on the Toronto equity index were trading in the red. The benchmark, which managed to record a modest gain in 2014, has been held back by the energy group.
The energy sector shed 6.5 percent in the session and has lost about a third of its value in the last six months. Oil prices plunged to a 5-1/2-year low on persistent concerns about oversupply. [O/R]
Investors are trying to assess the impact of the recent pullback on both the economy and equity markets.
“The question is, what does this relentless decline in crude oil tell us about the state of the global economy? The impact on oil-exporting countries such as Canada is quite substantial,” said Elvis Picardo, strategist at Global Securities.
“It’s a case where oil is breaking through one downside support level after another. At this point, it’s ‘sell the energy producers first and worry about the implications later’,” he said.
Picardo said his clients are looking for opportunities in sectors other than energy. ”The core premise continues to be that 2015 will be a down year for the TSX.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 360.95 points, or 2.45 percent, at 14,392.70, its biggest drop since April 2013. Nine of the 10 main sectors on the index were in the red.
Weaker copper prices, which were down 1.8 percent, pulled mining stocks lower. First Quantum Minerals Ltd (FM.TO) declined 7.5 percent to C$15.85, and Teck Resources Ltd TCKb.TO lost 3.5 percent to C$15.57.
The financial sector fell 2.1 percent. Toronto Dominion Bank (TD.TO) was down 2.3 percent at C$53.94.
But the weakness in equity markets helped boost appetite for bullion, which boosted the gold-mining sector. Eldorado Gold Corp (ELD.TO) jumped 4.8 percent to C$7.89.
Editing by James Dalgleish and Cynthia Osterman