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Toronto stock market down after disappointing GDP data, low oil prices

August 31, 2016 - 2:10 PM

TORONTO - The main index on the Toronto Stock Exchange registered a nearly triple-digit loss Wednesday on the back of disappointing GDP data and oil prices that hit their lowest level in nearly three weeks.

The S&P/TSX composite index fell 86.90 points to 14,597.95. Eldorado Gold, B2Gold, Husky Energy, Cdn. Energy Services & Tech and MEG Energy Corp were among the biggest losers on the index, dropping between 3.21 per cent and 6.46 per cent.

"Energy and golds are having a material impact, negative impact in the market," said Patrick Blais, a senior portfolio manager at Manulife Asset Management.

Markets in New York fared slightly better, but also closed in the red.

The Dow Jones industrial average was down 53.42 points at 18,400.88, the broader S&P 500 composite index declined 5.17 points to 2,170.95 and the Nasdaq composite lost 9.77 points to 5,213.22.

The October crude contract fell US$1.65 to US$44.70 per barrel, its lowest since Aug. 12. That came after the U.S. government said crude oil stockpiles increased by 2.3 million barrels last week, more than analysts expected.

"Energy's had trouble finding traction as it reaches $50, and negative data points definitely sort of enforce a pullback or drive a pullback," said Blais, though he added it is only one data point and supply will ultimately be curtailed.

Blais said the latest quarterly GDP figures released Wednesday also had repercussions for the Canadian equity market and loonie, which lost 0.12 of a cent, closing at 76.24 cents US.

Statistics Canada said real gross domestic product fell at an annualized rate of 1.6 per cent during the second quarter thanks to weak exports and the wildfires in Fort McMurray, Alta., which forced oilsands operators to curb production. That marked the sharpest economic decline since the second quarter of 2009.

Canada's economy, which remains partly dependent on commodities for growth, has been hobbled since energy and material prices have pulled back, Blais said.

"There's definitely challenges ahead for Canada," he said.

Blais said the federal government is taking the right steps by pushing through infrastructure spending to try to maintain domestic growth, but it will still be challenging to offset the decline in energy prices, especially in Western Canada.

Elsewhere in commodities, the October natural gas contract was up six cents to US$2.89 per mmBTU.

The December gold contract fell $5.10 to US$1,311.40 an ounce and December copper contracts rose a tenth of a cent to US$2.08 a pound.

— With files from the Associated Press

Follow @AleksSagan on Twitter.

Note to readers: This is a corrected story. A previous version had an incorrect figure for the S&P/TSX composite index.

News from © The Canadian Press, 2016
The Canadian Press

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