TORONTO (Reuters) - Canada’s main stock index hit an eight-month low on Tuesday, dropping more than 11 percent from last month’s record high as plunging international oil prices took domestic energy producers down with them.
Crude shed almost $4 a barrel as mounting evidence of slackening demand and unrelenting U.S. shale output left traders struggling to find a floor for oil’s four-month rout.
The resource-focused TSX index suffered a third straight session of 1 percent-plus losses.
“It certainly seems like it’s nothing short of a bloodbath, especially in the energy patch,” said Elvis Picardo, a strategist at Global Securities in Vancouver.
Pipeline operator TransCanada Corp (TRP.TO) slumped 5.6 percent to C$50.53 ($44.76), Canadian Natural Resources Ltd (CNQ.TO) lost 5 percent to C$36.56 and Enbridge Inc (ENB.TO) gave up 3.3 percent to close at C$48.63.
“The sentiment has collapsed,” Picardo said. “When you see a decline of this magnitude, it sometimes smacks of panic selling, and that’s exactly what’s happening right now.”
The International Energy Agency cut its forecast for oil demand, and U.S. forecasts projected another big bump in shale production.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended the day down 190.68 points, or 1.34 percent, at 14,036.68. Nine of the 10 main sectors closed in the red.
The energy sector - a major index contributor - tumbled 3.7 percent and is down about 26 percent since mid-June.
“With today’s decline, we are now officially in correction territory,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.
“We’re seeing a weakness, a return to volatility, something North American markets haven’t seen in a while. (These pullbacks) will be more of the norm than the exception going forward.”
Fehr expects the Canadian market to be pressured by volatile commodity prices.
“It’s a reflection that, on a global scale, economic growth hasn’t hit its stride,” he added.
Financials, the index’s most heavily weighted sector, declined 1.1 percent.
Editing by Peter Galloway and Andre Grenon