TORONTO (Reuters) - The Toronto Stock Exchange’s main index plunged again on Wednesday as resource stocks were pressured by falling commodity prices on concerns global economic weakness would cut demand.
The tumble chipped away at big gains made on Tuesday when the benchmark index logged a record 9.82 percent rise on hopes that moves by policy-makers around the globe would help fix the financial crisis.
The heavily-weighted energy sector led the way down, dropping 11.8 percent as U.S. crude plummeted $4.09 a barrel to settle at $74.54 a barrel on recession fears.
Base metals prices also weighed on the benchmark index, helping to push the materials sector down by 9.7 percent.
“The market is saying to us it’s going to take longer for general business to get going than maybe people were thinking,” said Brian Pow, vice president, research and equity analyst at Acumen Capital Partners, in Calgary, Alberta. “As a result, maybe earnings are not going to be as good as one would expect.”
Sentiment will be tough to change unless there’s some evidence of an improved housing market, said Andrew Martyn, portfolio manager at Davis-Rea.
“What you really need in the United States if you want clear sailing from a consumer point of view and a healthy psychological point of view, which carries on to stocks and car buying and house buying ... you need real estate to base, flatten out and go back up,” he said.
The S&P/TSX composite index closed down 631.83 points, or 6.35 percent, at 9,323.83, with all but one of its 10 main groups lower. The consumer staples group rose 1.4 percent.
In the oil patch, EnCana Corp dropped 12.8 percent to C$44.30 after it said it would delay its plans to split into two independent energy companies, citing volatility in global financial markets.
Genuity Capital Markets cut its price targets on several Canadian gold producers including Barrick Gold and Goldcorp, and it also raised its ratings on Agnico-Eagle Mines, Eldorado Gold and Alamos to “buy” from “hold”.
The gold mining subindex was down 7.6 percent.
Also lower were heavyweights Potash Corp of Saskatchewan, down 17.5 percent at C$92.57, and Agrium Inc, which fell 12.6 percent to C$40.90.
In company news, Teranet Income Fund fell 4.8 percent to C$10.00. Teranet said it has withdrawn its recommendation that unitholders reject an C$11 a unit takeover bid by Borealis Infrastructure Management.
Wednesday’s tumble comes after Canadians reelected Prime Minister Stephen Harper and his Conservatives with a stronger minority in Tuesday’s election. [ID:nN15296715] For links to more stories, see: [ID:nN13406994]
Market volume was 517.89 million shares worth C$6.815 billion. Decliners outpaced advancers 1,227 to 390. The blue chip S&P/TSX 60 index closed 40.49 points lower, or 6.72 percent, at 562.16.
The Dow Jones industrial average fell 733.08 points, or 7.87 percent, at 8,577.91, while the Nasdaq Composite Index ended down 150.68 points, or 8.47 percent, at 1,628.33.
Reporting by Jennifer Kwan; Editing by Peter Galloway