Economy & Markets

TSX drops more than 260 points

By David Hodges |
Source: The Canadian Press

The Toronto Stock Exchange had its biggest loss of the year as North American markets plunged amid concerns that turmoil in Washington could hinder U.S. President Donald Trump's pro-business agenda.

The S&P/TSX composite index was down 269.65 points at 15,273.68 on Wednesday, pulling back 1.73% in a broad-based decline.

The commodity-heavy index's largest reversal this year had been on Feb. 24, when it fell 247.73 points.

Gold stocks were the TSX's only positive sector as investors turned to the precious metal as a safe-haven asset.

The June bullion contract surged $22.30 to US$1,258.70 an ounce.

"Really, nothing about what's going on today is a surprise," said Kash Pashootan, a senior vice president and portfolio manager at First Avenue Advisory, a Raymond James company in Toronto.

"You're starting to see the markets sober up and price in something other than perfection, which has really been the theme over the last few months since Trump took the reins in the United States."

A published report late Tuesday said that the U.S. president allegedly made a personal appeal to now-fired FBI Director James Comey to drop the bureau's investigation into former National Security Adviser Michael Flynn.

The White House denied the report, but the latest political drama unfolding in Washington weighed on markets, stoking concerns over how the potential fallout may affect the Trump administration's ability to pass corporate tax cuts and other business-friendly reforms.

In New York, the Dow Jones industrial average shed 372.82 points to 20,606.93, the Nasdaq composite index fell 158.63 points to 6,011.24, and the S&P 500 index lost 43.64 points to 2,357.03.

Pashootan said that while Wednesday's market drop has ended an unusually long period of calm, investors should be relieved that risk and doubt are being priced into valuations.

"I'm happy to be seeing the markets behaving the way they are today because it tells us that the system still works," he said.

"We questioned that the last few months when we only saw markets going higher and turning a blind eye to anything other than a 100-per-cent perfect outcome with all the promises made."

In currencies, the Canadian dollar traded at an average value of US73.45¢, weakening 0.10 of a U.S. cent from Tuesday.

Elsewhere in commodities, the June crude oil contract advanced US41¢ to US$49.07 per barrel, the June natural gas contract fell US3.8¢ to about US$3.19 per mmBTU, and the July copper contract shed 0.4 of a cent to roughly US$2.55 a pound.

With files from The Associated Press