Toronto's main stock index broke its seven-month rally with its on Friday, as its two big resource sectors bore the brunt of the sharp decline. Losses were heavy in Suncor Energy, Barrick Gold and other commodity-based issues, which account for more than 40 percent of the index's weighting. The fall was induced, by softening prices for oil and gold, while the US dollar recovered from steep losses on reduced risk appetite.
Suncor dropped 2.84 percent to C$35.92, while Encana Corp shed 2.96 percent to C$60. Barrick tumbled 1.8 percent to C$38.96. "The strength in the US dollar has got everyone discombobulated. The commodities are softening and so people are getting out of commodities, both in oils and golds, and other metals," said Sal Masionis, a stockbroker at Brant Securities.
Overall, the oil and gas sector and the materials group each dropped 2.47 percent. Toronto Dominion Bank and other heavyweight banks also handed back some of the meaty gains they made during the index's 269-point rally on Thursday. TD led all influential decliners, down 3 percent at C$61.68.
The S&P/TSX composite index closed 164.47 points lower, or 1.49 percent, at 10,910.75, paring a decline that saw it skid as low as 10,767.58. Early indications at the start of October suggested the index was on track for an eighth straight month of gains, but five triple-digit declines in six sessions shut down those hopes. The main stock index finished the month lower for the first time since February. In its seven-month rally, the TSX rose more than 35 percent and almost without much give-back all the way up. It finished down 4.25 percent in October.
"I still think we're in for a correction. I think the debate most people have is whether it's going to be between now and the end of the year, or is it going to be end of the year, January or February. It's hard to say," said Steve Ibel, institutional equities trader at Beacon Securities in Halifax, Nova Scotia. Also dampening the market's mood, a report on Friday showed Canadian gross domestic product unexpectedly shrank by 0.1 percent in August from July, casting serious doubt on the Bank of Canada's forecast for economic growth in the third quarter.
The telecoms group was the sole bright spot among the TSX's 10 main groups, rising 1.3 percent, led by Rogers Communications, which jumped 3.7 percent to C$32.11. Telus rose 3.5 percent to C$33.99, while BCE gained 1.1 percent to C$25.89. The companies, Canada's Big Three wireless providers, shot higher the day after the federal telecom regulator said start-up carrier Globalive did not comply with foreign ownership rules, delaying new competition for the big the incumbents.
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