Update: TSX Posts Triple Digit Loss in Broad-Based Decline, Paced by a Weaker Healthcare Sector

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Canada's main stock market posted a triple digit loss Thursday in a broad-based decline which left all of the TSX sectors in the red. The S&P/TSX Composite Index shed 120 points or 0.7% to close at 16,016. U.S. markets were also weaker today. The TSX set a record Wednesday, closing at 16,136.

The healthcare sector led decliners on the TSX, losing 3% as Valeant Pharmaceuticals (VRX.TO) plunged 11%. Energy shed 1.4% even as oil prices rose 0.8%. Financials lost 0.6% while materials declined 0.8% despite stronger gold prices .

Instock news Cenovus Energy (CVE.TO) lost 5% as the energy company said Thursday it is planning to cut about 15% of its workforce as it looks to reduce costs next year. The company said it expects to find savings in areas such as drilling performance, development planning and optimized scheduling of oil sands well start-ups. Heavily traded Bombardier (BBD-B.TO) shed nearly 3% after announcing it expects its revenue to grow to between US$17 billion and US$17.5 billion next year, less than analysts had expected. Aurora Cannabis (ACB.TO) gained 1.5%, one of the few actively traded shares to close in positive territory Thursday. TD Bank (TD.TO), one of the day's most influential stocks, lost 1%.

In economic news, Canada's new housing price index grew 0.1% m/m in October after the 0.2% gain in September. The new housing price index slowed to a 3.5% y/y pace from the 3.8% clip in September. The index saw peak growth of 3.9% y/y in April and June of this year. Meanwhile, The Canadian Real Estate Association has cut its home sales forecast for next year due to the impact of tighter mortgage regulations taking effect in the new year, which CREA says will erode affordability. The association representing real estate agents across the country also downgraded projections for 2017. It now expects national sales activity this year to decline by 4% to 513,900 units this year due to weak activity in Ontario, after the province in April announced measures to cool the market. However, it says the national average price of a home is still expected to rise to $510,400, up 4.2% compared to 2016. CREA is now forecasting a 5.3% drop in national sales to 486,600 units next year. The national home price is expected to slip by 1.4% in 2018 to $503,100. Finally, Canadian household debt as a share of income hit a record high in the third quarter, Statistics Canada said on Thursday in a report likely to reinforce concerns that consumers could run into trouble as interest rates rise. The ratio of debt to disposable income rose to 171.1% from an upwardly revised 170.1% in the second quarter. On a seasonally adjusted basis, households borrowed $23.4 billion in the third quarter, down from $28.7 billion in the preceding quarter.

Bank of Canada governor Stephen Poloz says with the economy running at close to full tilt, a mechanical approach to setting interest rates would suggest higher borrowing rates should already be in place. But in a speech Thursday, Poloz said the central bank has been focused on scrutinizing some "unusual factors" at play, including encouraging signs companies are starting to expand their capacity by investing in equipment and by hiring more people. In prepared remarks of his address released in Ottawa, he said wages have been growing and the workforce has seen a sudden jump in participation by young people. "Given the unusual factors at play, the bank is monitoring these risks in real time -- the term we use for this is data dependent -- rather than taking a mechanical approach to policy setting,"' Poloz said in a speech to the Canadian Club in Toronto. "We will continue to be cautious in our upcoming policy decisions, guided by incoming data in assessing the economy's sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation." Poloz also sounded the alarm about the hype surrounding bitcoin, stating that is "closer to gambling than investing."

The Canadian dollar gained more than a four-tenths of a cent following Poloz's speech to 78.43 US.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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