Canada’s main stock index fell on Wednesday, driven by a drop in energy stocks as oil prices slipped.
Concerns of a slowing global economy weighed on equity markets after the International Monetary Fund (IMF) cut its global GDP forecasts for the first time in two years on Tuesday, sending U.S. 10-year bond yields to multi-year highs.
The Toronto Stock Exchange’s S&P/TSX composite index was down 253.01 points, or 1.6 per cent, at 15,601.49.
All 11 of Canada’s major sectors were down, led by the energy sector’s 2.9-per-cent decline.
Oil prices dropped more than $1 a barrel on Wednesday as U.S. equity markets broadly fell, but losses were limited as U.S. sanctions restricted Iranian exports and as Hurricane Michael closed nearly 40 percent of U.S. Gulf of Mexico oil output.
Brent crude futures fell $1.43 to $83.57 a barrel, a 1.7-per-cent loss. The global benchmark posted a 1.3-per-cent gain on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures were down $1.56 to $73.40 a barrel, a 2.1-per-cent loss.
A 1.4-per-cent drop in the materials sector, which includes precious and base metals, miners and fertilizer companies, also weighed on the market.
The financials sector dropped 0.8 per cent and the industrials group fell 4 per cent.
SNC-Lavalin Group Inc. fell 14.2 per cent after announcing the Canadian government declined to enter into negotiations on a deal that would settle corruption and fraud charges against the company.
Apparel retailer Canada Goose fell 8.3 percent, while Westjet Airlines was down 5.5 per cent.
U.S. stock indexes dived over 1.5 per cent on Wednesday as worries over China and the impact of rising Treasury yields on global growth drove falls in luxury goods companies and chipmakers.
Technology stocks slid more than 2.8 per cent, the most among the 11 major S&P sectors, with the Philadelphia Semiconductor index down 3 per cent after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening.
Intel fell 2.1 per cent and Nvidia 4.7 per cent. Chip gear producers Applied Materials, Teradyne and ASML Holdings fell between 3.5 per cent and 4.6 perc ent.
Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 per cent after a warning from French luxury goods firm LVMH about softening demand in China.
That all played into a market that is increasingly worried about global growth after warnings from the IMF this week and a rise in Treasury yields to a more than 7-year high above 3 percent that signals a tightening of available capital globally.
U.S. Treasury yields held near multi-year highs after producer prices climbed 0.2 percent in September, feeding into the pressure on the Federal Reserve to continue to raise interest rates even as the global economy struggles with headwinds from President Trump’s trade war with China.
“The direct concern is higher interest rates,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“People fear building prices into the system, both from China trade problems, other tariffs the U.S. has put into place, wage pressure, and today there is a little bit of concern about what the Hurricane in Florida could do to energy prices.”
At 11:22 a.m. ET the Dow Jones Industrial Average was down 418.71 points, or 1.58 percent, at 26,020.11, the S&P 500 was down 45.42 points, or 1.56 per cent, at 2,835.01 and the Nasdaq Composite was down 176.49 points, or 1.67 percent, at 7,5561.58
Eight of the 11 sectors were lower, with only the defensive utilities, real estate and consumer staples sectors higher.
Heavyweights Apple shed 1.9 per cent and Amazon.com fell 3.4 per cent. A Republican senator has asked the two companies for a staff briefing about a Bloomberg report that the Chinese government implanted malicious hardware into server motherboards provided by Super Micro Computer Inc.