Canada’s main stock index fell at open on Friday as lower oil prices that hit multi-month lows pulled down energy shares.
The Toronto Stock Exchange’s S&P/TSX Composite index was down 89.24 points, or 0.58 per cent, at 15,268.23.
U.S. stocks opened lower on Friday, as a batch of weak Chinese data raised concerns about global growth a day after the Federal Reserve hinted at gradual tightening of borrowing costs.
The Dow Jones Industrial Average fell 42.11 points, or 0.16 per cent, at the open to 26,149.11. The S&P 500 opened lower by 12.73 points, or 0.45 per cent, at 2,794.10. The Nasdaq Composite dropped 62.37 points, or 0.83 per cent, to 7,468.51 at the opening bell.
The news gave investors a reason to keep away from riskier assets, with worries about rising interest rates and effects of the U.S.-China trade war taking the shine off a decade-long bull run for U.S. stocks this year.
U.S. crude price entered “bear market” territory, falling more than 20 per cent since early October and below $60 a barrel, potentially adding more pressure on the S&P energy index , which was down about 4.9 per cent this year.
Oil majors Exxon Mobil Corp and Chevron Corp were down more than half a percent in early trading, while price of copper, considered an economic bellwether, drove 3.1-per-cent loss in miner Freeport McMoran Inc.
“A lot of investors look at oil prices as the general indicator of the global economy, so it being weak is not a good sign,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Amid a bitter trade dispute between the Washington and Beijing, Chinese data showed producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity.
The China report sent Asian stocks into a tailspin, while trade-sensitive stocks such as Boeing Co and Caterpillar Inc fell more than 0.75 per cent.
“Worries about trade war and how the slowdown in China will impact the rest of the world mean stocks appear to be more risky, so there’s a typical risk-off move in markets today,” said DZ Bank rates strategist Pascal Segesser.
The Fed policymakers, as expected, left interest rates unchanged following a two-day meeting on Thursday. But their policy statement signaled more rate hikes on the way with the next one expected in December, their fourth this year.
Data on Friday showed U.S. producer prices rose more than expected in October and at their fastest pace in six years, fueled by a jump in costs for energy and trade services.
Prices paid by producers rose 0.6 per cent, while analysts polled by Reuters had expected producer prices to rise 0.2 per cent from September.
Oil prices fell to multi-month lows on Friday as global supply increased and investors worried about the impact on fuel demand of lower economic growth and trade disputes.
Benchmark Brent crude fell below $70 a barrel for the first time since early April, down more than 18 per cent since reaching four-year highs at the beginning of October.
Brent dropped $1.52 to a low of $69.13 before recovering to around $69.5, down 4.5 per cent for the week and 16 per cent this quarter.
U.S. light crude fell for a 10th successive day, dropping under $60 a barrel to its lowest in eight months. The U.S. crude contract hit a low of $59.28, down $1.39 and off more than 20 per cent since its peak in October. That put it in “bear market” territory, borrowing a definition used in stock markets.
“Oil prices are being hit by the double whammy of rising supplies and demand concerns,” Interfax Europe analyst Abhishek Kumar said.
Oil peaked in October on concerns that U.S. sanctions on Iran that came into force this week would deprive the oil market of substantial volumes of crude, draining inventories and bringing shortages in some regions.
But other big producers, such as Saudi Arabia, Russia and shale companies in the United States, have increased output steadily, more than compensating for lost Iranian barrels.
Reuters