Toronto stocks join global selloff as Credit Suisse sparks concerns

The S&P/TSX composite index of the Toronto Stocks Exchange was down 387.15 points, or 1.97%, at 19,307.01 by 10:30 a.m. ET (1430 GMT), on pace to have its worst day in more than five months.

Energy and financial stocks weighed down Canada’s heavily weighted main stock index, which dropped on Wednesday as Credit Suisse’s instability renewed worries about a banking crisis.

After a slight relief bounce on Tuesday, global financial markets fell once more as Credit Suisse hit a record low after its biggest supporter announced it would stop purchasing additional shares of the Swiss lender.

After the failure of American banks Silicon Valley Bank (SVB) and Signature Bank, concerns about a banking crisis were renewed by CS’s precipitous declines (NASDAQ:SBNY).

The biggest losers were energy companies, which dropped 5.7% as Brent crude hit a three-month low and oil prices continued to fall.

The energy industry in Canada is on pace to have its worst single-day performance of the year.

Financials, Canada’s largest sector by weight, joined a global selloff in bank stocks, falling 2.2%.

“The TSX is very strongly weighted to oil and financials and if there is any sort of loss in confidence or volatility in that sector, it will underperform,” explained Matt Manara, partner and portfolio manager at Avenue Investment Management.

Since the failure of American lenders SVB and Signature raised concerns about contagion in global financial equities, Canadian stocks have lost virtually all of their 2017 gains, with the index currently trading at par.

Canadian Pacific (NYSE:CP) Railway saw a 5.7% increase in its share price after the U.S. transport regulator authorised its $31 billion acquisition of Kansas City Southern (NYSE:KSU) with conditions.