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North American stock markets plunge on growing fears of recession

TORONTO — North American stock markets sustained heavy losses with U.S. markets posting their worst start to October in more than a decade on growing fears of a recession.

Lingering negative reaction to Tuesday's weak U.S. manufacturing numbers was worsened by Wednesday's report of a pullback in small business hiring in September.

That had everyone talking about recession again ahead of Friday's jobs report and comments from Federal Reserve chairman Jerome Powell, said Michael Currie, vice-president and investment adviser at TD Wealth.

"Investors seem to be thinking that we're heading for a downturn and they're heading for the exits," Currie said in an interview.

The S&P/TSX composite index closed down 136.69 points or 0.8 per cent at 16,310.97, after losing nearly 211 points on Tuesday.

Eight of the 11 major sectors on the Toronto market were down, led by energy as Encana Corp. lost 3.6 per cent on lower crude oil prices caused by U.S. stockpiles coming in higher than expected last week.

The November crude contract was down 98 cents at US$52.64 per barrel and the November natural gas contract was down 3.6 cents at US$2.25 per mmBTU.

Cenovus Energy Inc. was 3.5 per cent lower despite the oilsands producer rewarding its shareholders with a 25 per cent increase in its dividend while tightening its spending plans and maintaining "modest" production growth expectations over the next five years.

The heavyweight financials sector was off 1.5 per cent with Toronto-Dominion Bank leading the declines after TD Ameritrade said it is eliminating commissions for online trading of U.S. stocks and exchange-traded funds in the latest round of an industry battle over fees.

The consumer discretionary sector was tied with materials for the largest gain on the day after The Stars Group Inc. shares surged almost 31 per cent after the online gaming company agreed to be acquired by Flutter Entertainment in an all-stock deal that values the Toronto-based company at about $9 billion.

Materials was up one per cent on rising gold prices as investors sought a safe haven.

The December gold contract was up US$18.90 at US$1,507.90 an ounce and the December copper contract was up one cent at US$2.57 a pound.

The Canadian dollar traded for an average of 75.22 cents US compared with an average of 75.51 cents US on Tuesday.

In New York, the Dow Jones industrial average was down 494.42 points or 1.8 per cent at 26,078.62. The S&P 500 index was down 52.64 points at 2,887.61, while the Nasdaq composite was down 123.44 points at 7,785.25.

Currie said investors will be waiting to get some signal from Powell as expectations for an October interest rate cut jumped to 60 per cent, from 40 per cent previously.

"So in order to get some relief the markets are probably going to want to hear some more dovish tones out of chairman Powell on Friday in addition to the jobs numbers."

 

This report by The Canadian Press was first published Oct. 2, 2019.

Companies in this story: (TSX:TSGI, TSX:TD, TSX:CVE, TSX:ECA, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press