TORONTO — Canada's main stock index resumed where it left off Friday by falling on continued concern about global economic growth.
The market was in a "holding pattern" Monday after its worst selloff of the year as investors continued to digest suggestions of a potential global economic slowdown, says Craig Fehr, Canadian markets strategist for Edward Jones.
The yield curves in Canada and the United States have inverted, suggested dark clouds ahead.
"It's not surprising to see the Canadian curve inverted at this stage and I think it's indicative of the rather unique growth outlook that the Canadian economy faces at the moment," he said in an interview.
Fehr said the concern around the yield curve inverting for the first time in about a decade is warranted since it has been a pretty reliable predictor of the economy.
"It is not a perfect predictor, however, and in fact we've seen false positives before in the past where the yield curve did invert and it did not signal an impending recession."
The S&P/TSX composite index closed down 23.47 points at 16,065.86 after hitting an intraday low of 16,021.00
The energy sector fell 1.9 per cent as crude oil prices were sensitive to Chinese data suggesting its economy was slowing. Crescent Point Energy Corp. was off nearly five per cent, followed by Cenovus Energy Inc, Suncor Energy Inc, Canadian Natural Resources and Encana Corp.
"I think the weakness in oil is probably governing a lot of what we're seeing from the TSX at the moment," Fehr said.
The May crude contract was down 22 cents at US$58.82 per barrel and the May natural gas contract was up 0.7 of a cent at US$2.77 per mmBTU.
However, materials gained 1.15 per cent as investors turned defensive stocks and safe havens such as gold.
The April gold contract was up US$10.30 at US$1,322.60 an ounce and the May copper contract was up 1.4 cents at US$2.86 a pound.
Yamana Gold Inc., Eldorado Gold and Barrick Gold Corp. led sector's gains.
The Canadian dollar traded at an average of 74.52 cents US compared with an average of 74.57 cents US on Friday.
In New York, the Dow Jones industrial average was up 14.51 points at 25,516.83. The S&P 500 index was down 2.35 points at 2,798.36, while the Nasdaq composite was down 5.13 points at 7,637.54.
Fehr said it's reasonable for markets to take a breather, especially given the 12.2 per cent increase since the beginning of the year, as investors recalibrate their expectations for growth.
"I think investors would be well-served to continue to pay attention, be vigilant and ensure that portfolios are well-protected for additional volatility because that's what we're going to get in the near term."
Companies in this story: (TSX:ABX, TSX:YRI, TSX:ELD, TSX:CPG, TSX:CVE, TSX:CNQ, TSX:ECA, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press