Canadian stocks slumped a fifth day, closing at the lowest level in almost two years, as global markets plunged with commodities amid growing concern economic growth is slowing.
Equities tumbled the most since September 2011 this week, after manufacturing data from China slowed to the weakest since the global financial crisis. Energy producers, the worst-performing industry in the Canadian benchmark this year, plunged 8.9 percent this week, trading at a March 2009 low. Crude prices capped an eighth straight week of losses, the longest slump since 1986, and dipped to less than $40 a barrel in New York for the first time since 2009.
Royal Bank of Canada, the nation’s largest lender, tumbled 1.7 percent as financial services companies retreated 2 percent. Canada’s largest banks begin reporting third-quarter earnings Aug. 25.
The Standard & Poor’s/TSX Composite Index fell 263.33 points, or 1.9 percent, to 13,473.67 at 4 p.m. in Toronto, a December 2013 low. The benchmark Canadian equity gauge has fallen 5.6 percent this week, the worst drop since September 2011.
“China and the emerging markets are starting to slow significantly,” said James Thorne, a fund manager at Caldwell Investment Management in Toronto. His firm manages about C$1 billion ($759 million). “It’s on the forefront of everybody’s minds. Canada is viewed as a commodity-based economy and international investors are pulling money out of Canada.”
The Dow Jones Industrial Average plunged 3.1 percent into a correction and the S&P 500 fell 3.2 percent in New York, the biggest decline since November 2011.
The MSCI All-Country World Index of developed and developing markets sank 2.7 percent, the most in almost two years. The Shanghai Composite Index decreased 4.3 percent as global markets retreated. European shares tumbled into a correction while equities in Hong Kong, Indonesia and Taiwan entered bear markets.
The preliminary Purchasing Managers’ Index for China from Caixin Media and Markit Economics was at 47.1 in August, compared with a median estimate of 48.2 and the final reading of 47.8 the previous month. Numbers less than 50 indicate contraction. China is Canada’s second-largest trading partner.
Energy producers are the worst-performing industry in the S&P/TSX this year pacing declines with a 23 percent drop. Crude has slumped more than 30 percent from this year’s June peak amid concern global growth is slowing.
Baytex Energy Corp. plunged 10 percent after the company said it will suspend its dividend and cut capital spending plans for 2016.
The Bloomberg Commodity Index, which tracks a basket of 22 resources from crude to gold, sank 1.6 percent to a 2002 low. First Quantum Minerals Ltd. plunged 7.4 percent as copper retreated.
Eldorado Gold Corp. plunged 14 percent, the most since January, after the gold producer said it would suspend operations in northern Greece. Eldorado is struggling to develop mines in the face of government operation, describing the Greek ministry of energy as “openly hostile.”
Goldcorp Inc. rose 0.7 percent as gold capped its biggest weekly gain since January with a 4.2 percent increase. The roiling equity markets has investors seeking a haven in gold, seen as an alternative investment. Gold producers rallied 6.1 percent this week.