Losses continued to pile up on the Toronto stock market Friday as worries about the global economy punished resource stocks in particular and sent the market down to its lowest level since April.
The S&P/TSX composite index tumbled 180.86 points to 14,279.74 on top of a 206-point drop Thursday sparked by worries about the global economy, central bank moves to remove stimulus measures and a stronger U.S. dollar.
Energy stocks led the way down as the November crude contract in New York fell 68 cents to US$85.09, the lowest level since late 2012.
The greenback weighed on the Canadian dollar despite data showing that the economy created 74,100 jobs last month, far above the gain of 20,000 positions that economists had expected. The loonie lost 0.14 of a cent to 89.36 cents US.
U.S. indexes also added to losses as the Dow Jones industrials slipped 2.6 points to 16,656.65 following a 335-point plunge, the Nasdaq lost 48.09 points to 4,330.25 while the S&P 500 index shed 6.78 points to 1,921.43.
Data that showed Germany's exports in August dropped by the largest amount in five years helped spark Thursday's selloff, adding to other negative news of declines in German factory orders and production. It raised worries that Germany — Europe's economic powerhouse — could fall back into recession. There is pressure on the European Central Bank to embark on further stimulus moves. But ECB president Mario Draghi made it clear Thursday that governments need to do more on the fiscal side.
Worries about the global economy were already elevated after the International Monetary Fund downgraded its economic forecast.
There are also jitters on markets about the impending end to the years-long move by the Fed to keep long-term interest rates low. Its third program of quantitative easing, involving the massive purchase of bonds, comes to an end this month. Analysts observe that stocks retreated at the end of the Fed's previous QE programs, which have been credited for supporting a strong rally on stock markets since the lows of early 2009.
A strong greenback has also hurt sentiment since a rising currency weighs on U.S. exports and the profits of American multinationals. The currency has surged since the end of August, reflecting a sharp tumble in the euro currency.
The higher American currency has also added to the woes of the resource-heavy TSX as it has pressured commodities, which are priced in American dollars.
Stocks are well off the high-water mark for the year that was reached in late summer when the TSX was up over 14 per cent year to date. The main Toronto index is now ahead about five per cent.
At the same time, analysts have been saying a correction on American markets is long overdue.
On Friday, the TSX energy sector was down almost two per cent with the group down about 16 per cent over the last month as oil prices have also suffered from rising supplies and lower demand forecasts.
Metal prices also suffered with December copper two cents down to US$3.01 a pound and the base metals component declined 1.3 per cent.
Rail stocks fell alongside miners, taking the industrials sector down three per cent.
The gold sector fell 1.4 per cent while December gold was $2.80 lower to US$1,222.50 an ounce.