- S&P/TSX has plunged 7.4 percent in nine-day losing streak
- Morgan Stanley says Brent oil may slump to $20 a barrel
Energy’s drag on Canadian stocks showed no signs of abating as the nation’s benchmark equity gauge slumped a ninth straight day, the longest losing streak since 2002.
Canadian equities have lost 7.4 percent during this period with the Standard & Poor’s/TSX Composite Index failing to post a positive trading day in 2016. Crude futures in New York tumbled to a 12-year low.
Analysts at Morgan Stanley projected Brent oil may slump to as low as $20 a barrel on strength in the dollar. Brent dropped 6.7 percent to $31.32 a barrel in London. Bank of America Corp. cut its average 2016 Brent forecast to $46 a barrel from $50.
“Risk appetite will not return until we start to see crude carve out a bottom,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., in a note to clients.
The S&P/TSX fell 1 percent to 12,319.25 at 4 p.m. in Toronto. The gauge capped a 20 percent plunge from its September 2014 record on Jan. 7, hitting a magnitude in declines commonly defined as a bear market. Canada was the second Group of 7 country to see its benchmark enter a bear market, after Germany’s DAX Index did in August.
Energy producers sank 2.7 percent. The group, which accounts for about 20 percent of the broader index, was the worst-performing sector in the S&P/TSX last year.
Suncor Energy Inc. fell 4 percent to a December 2014 low, after extending its hostile offer for Canadian Oil Sands Ltd. Canadian Oil Sands fell 3.2 percent. Suncor Chief Executive Officer Steve Williams said in a statement he was “encouraged” by the number of shares tendered to the deal.
First Quantum Minerals Ltd. sank 9.4 percent to lead losses among base metals producers as copper prices reached a fresh six-year low on concern the economic slowdown is worsening in China. Freeport-McMoRan Inc., the top publicly traded copper producer, plunged as much as 20 percent in New York.
The S&P/TSX Gold Index lost 3.7 percent as the price of the metal retreated after posting the best week since August. Gold producers had rallied at the start of the year as investors sought a haven from the market turmoil in China. Barrick Gold Corp. lost 2.7 percent.