TSX sheds almost 400 points as oil price slumps again
GDP data and lower oil prices send Canada's main stock index sharply lower
The Toronto Stock Exchange lost 377 points today after following the lead of a global stock sell-off and investors digested underwhelming GDP data out of Statistics Canada.
The S&P/TSX Composite Index closed at 13,481, down 377 points. In addition to the GDP number showing contraction in the second quarter, Canada's benchmark stock index was also dragged lower by oil prices that came back down to earth after a huge jump on Monday.
The price of a barrel of oil lost more than $4 to trade just above the $45 US a barrel level when stock markets closed in North America.
The TSX is closely correlated to fluctuations in the price of oil, as many of the index's heaviest hitters are tied to energy prices. So, too, is the loonie, which shed a quarter of a cent to 75.71 cents US.
U.S. stocks also sold off, with the Dow Jones down 469 points to 16,058. Weakness in U.S. stocks was more based on some fresh numbers out of China showing an index of the country's factory purchasing managers dropped to a reading of 49.7 points in August. Anything below 50 implies contraction.
The factory data was taken as more possible evidence of a slowdown in the world's second-largest economy that would impact growth everywhere else. No less than the IMF said exactly that on Tuesday, with head Christine Lagarde saying "overall, we expect global growth to remain moderate and likely weaker than we anticipated last July."
"Monday's relatively peaceful markets are a distant memory as Chinese data and shares sparked another severe overnight reaction from the developed world," said John Briggs, head of fixed income strategy at the Royal Bank of Scotland.