Energy leads Toronto stocks lower as U.S. stocks plunge; Loonie ticks higher

TORONTO – Falling oil prices dragged down Canada’s main stock index on Tuesday to its lowest point this year, as U.S. markets also plunged into the red.

The S&P/TSX composite index fell 139.21 points to 15,955.51, with energy stocks leading the broad-based decline, as the March crude contract fell US$1.06 to US$64.50 per barrel.

The last time the TSX closed below 16,000 was Dec. 6.

“Oil is certainly a risky asset for asset managers out there,” said Sid Mokhtari, executive director at CIBC Capital Markets. “It’s very reasonable to say that as oil goes so should equity markets in general. Now you’re seeing some sort of correction of oil.”

South of the border, Wall Street slumped to its worst loss since August, also giving back some of the big gains it has posted since the beginning of the year.

Health-care companies were the biggest losers on Tuesday, as insurers, drugmakers and distributors slumped following news that Amazon was teaming up with JPMorgan Chase and Berkshire Hathaway on a new venture.

The Dow Jones industrial average dropped 362.59 points to 26,076.89. The S&P 500 index was down 31.10 points to 2,822.43 and the Nasdaq composite index gave back 64.02 points to 7,402.48.

Mokhtari partially attributed the broad losses to profit taking amid the recent unprecedented strength in U.S. equity markets.

“Really, I think a lot of it has to do with the fact that we’re going into some risk aversion toward equities,” he said. “Next month is a big month for pension managers. They have to have some allocation toward stocks and bonds.”

The sell-off also comes during a week with no shortage of potential market-moving corporate news and economic data. Several big-name companies are due to report quarterly results, including Apple, Amazon, Microsoft, Facebook and Google’s parent company Alphabet. Also on investors’ radar is a two-day meeting of the Federal Reserve’s policymaking committee that wraps up Wednesday.

In currency markets, the Canadian dollar closed at an average trading value of 81.12 cents US, up 0.05 of a U.S. cent.

Elsewhere in commodities, the March natural gas contract was up three cents to US$3.19 per mmBTU. The April gold contract was down US$5.10 to US$1,340.00 an ounce and the March copper contract was unchanged at US$3.19 a pound.

– With files from The Associated Press