TORONTO (Reuters) - Canada’s main stock index dropped on Monday, extending the previous week’s slide as worries about democracy protests in Hong Kong drove up market volatility, pulling down shares of financial and mining companies.
Hong Kong protesters defiantly stood their ground in the face of tear gas and police baton charges, while the Communist government in Beijing said it would not tolerate dissent and warned against any foreign interference.
The resource-heavy Canadian index’s fall followed a big drop last week, when the market was hit hard by a rally in the U.S. dollar and weakness in commodity prices.
Fears that recent strong signals from the U.S. economy might prompt the Federal Reserve to raise interest rates sooner that expected also weighed.
“It’s a combination of not just seasonal weakness but also concerns about the global economy,” said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.
“These are typical gyrations of the market. But because we’ve had such an extended run, there’s a concern about whether a 3 or 4 percent decline heralds the end of this bull market,” he added.
Picardo expects the benchmark index to recover some of these losses before the end of the year.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 49.85 points, or 0.33 percent, at 14,976.92. Six of the 10 main sectors on the index were in the red.
Financials, the index’s most heavily weighted sector, dropped 0.7 percent. Royal Bank of Canada (RY.TO) lost 1.1 percent to C$79.57 ($71.29), and Toronto-Dominion Bank (TD.TO) declined 0.9 percent to C$54.91.
The materials sector, which includes mining stocks, gave back 1 percent. Teck Resources Ltd TCKb.TO shed 2 percent to C$21.08, and Barrick Gold Corp (ABX.TO) fell 1.8 percent to C$16.71.
In corporate news, Encana Corp shares (ECA.TO) jumped 2 percent, to C$24.06, after the company said it agreed to buy Fort Worth, Texas-based Athlon Energy ATHL.N for $5.93 billion in cash.
Editing by Peter Galloway; Editing by Meredith Mazzilli