Canadian shares dropped more than 1 percent as a selloff in Chinese shares stoked concern that economic expansion will shrink in Canada’s second-largest trading partner.
The benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) retreated 1.4 percent to 14,416.52 at 12:12 p.m. in Toronto. Seven shares declined for every issue that advanced as all of the ten share groups were in the negative territory.
A rout in China’s stock markets threatened demand in the world’s largest buyer of commodities.
The energy sector, the main index's second most heavily weighted group, tumbled 2.4 percent as oil, Canada’s largest export, fell.
Suncor Energy (TSE:SU) declined 2.4 percent to C$34.10. Canada's largest oil sands producer agreed to trade some of its wind-power facilities for TransAlta’s (TSE:TA) Poplar Creek cogeneration facilities.
Enbridge (TSE:ENB), Canada's largest pipeline company, inched down 1.1 percent to C$58.04.
Brent crude was down 25 cents to $56.60 a barrel by 11:33 a.m., having traded as high as $57.75 yesterday. U.S. crude was down 88 cents at $51.45.
The materials sub-index, which includes mining shares, fell 1 percent even as gold, silver and copper gained.
Goldcorp (TSE:G), Canada’s largest gold miner by market value, gained 1 percent to C$21.30. Barrick Gold (TSE:ABX), the second-largest, added 1 percent to C$13.23.
Financials, the index's most heavily weighted sector, lost 1.2 percent. Royal Bank of Canada (TSE:RY), which has the heaviest weighting in the index, decreased 1.2 percent to C$75.53.
Toronto-Dominion Bank (TSE:TD), the second-largest bank by market value, declined 1.3 percent to C$52.20.
WestJet Airlines (TSE:WJA) sank 5.9 percent to C$25.00. Canada's second-biggest carrier expects revenue per available seat mile to drop roughly 5.7 percent year over year in the second quarter.
DataWind (TSE:DW) advanced 4.8 percent to C$2.20. National Bank increased its rating on the provider of wireless web to “outperform” on reporting revenue of C$11.04 million for the fourth quarter, up 107% from a year earlier.
The junior S&P/TSX Venture Composite Index (CVE:OSPVX) declined 1.3 percent to 644.09 at 12:11 p.m. in Toronto.
In economic news, Bank of Montreal’s Doug Porter joined a growing list of economists calling for Canada’s central bank to cut interest rates next week on signs of a faltering recovery, Bloomberg reported.
A report from C.D. Howe Institute suggested that Canada needs to be better prepared to weather a housing crash that would leave taxpayers and mortgage insurers on the hook. The Bank of Canada has said prices are overvalued by 30 percent and a dip remains the single biggest risk to the economy. The IMF has said the country’s residential real estate is about 12 percent overvalued, while Fitch said the Ontario market is 25 percent overvalued and condo prices may decline as much as 10 percent.
Separately, the value of Canadian building permits tumbled in May, giving back some of the past two months' strong gains as builders planned to construct fewer multi-family homes and institutional facilities, data from Statistics Canada showed today.
In the U.S., shares tumbled as investors grappled with a selloff in Chinese shares, nervousness over Greece and the upcoming Federal Reserve minutes. The S&P 500 (INDEXSP:.INX) sank 1.1 percent to 2,057.79. The 30-company Dow Jones Industrial Average (INDEXDJX:.DJI) declined 1 percent to 17,601.37, while the tech-heavy Nasdaq Composite (INDEXNASDAQ:.IXIC) dived 1.4 percent to 4,930.14. Most followed shares included Novartis, Symantec, Microsoft, Alcoa, Freeport-McMoRan, Tesla, Procter & Gamble, Container Store, CVS Health, and CarMax.