(Bloomberg) -- Canadian stocks dropped the most since February, erasing gains for the week, as speculation mounted that central-bank support that’s bolstered global financial markets may end sooner than previously anticipated.
The S&P/TSX Composite Index lost 1.8 percent to 14,539.88 at 4 p.m. in Toronto. The benchmark finished the holiday-shortened week with the worst weekly decline since May, trimming its gain this year to 12 percent.
“We were pretty complacent on interest rates so this was a bit of a shock,” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto. His firm manages about C$5 billion. “Oil was up yesterday, but it’s giving it all back so Canada is getting hit extra hard. And the jobs data is pretty weak for Canada so it’s all dependent now on the U.S. recovering in the second half and our ability to export to them.”
Stocks retreated worldwide as signs emerged that central banks are starting to reassess the benefits of further monetary easing. Federal Reserve Bank of Boston President Eric Rosengren warned that waiting too long to raise rates threatened to overheat the U.S. economy and could risk financial stability. European Central Bank President Mario Draghi on Thursday downplayed the need for more stimulus measures to bolster growth.
Data Friday showing Canadian employment rose faster than economists had forecast in August did little to bolster optimism in the nation’s economy. Earlier this week the Bank of Canada maintained interest rates while also warning that risks of weak inflation and economic growth have increased.
The S&P/TSX is closely linked to commodity prices with raw-materials and energy producers making up about 28 percent of the overall gauge. West Texas Intermediate crude futures dropped the most in more than a month, falling 3.7 percent in New York after the biggest U.S. stockpile slump in 17 years was seen as a one-time event.
Raw-material and energy producers in the S&P/TSX dropped more than 2.3 percent to weigh most on the index, as all of the 10 industries retreated. Concordia International Corp. and Valeant Pharmaceuticals International Inc. dropped at least 4.5 percent as the health-care group also sank 4.5 percent.
First Quantum Minerals Ltd. and Kinross Gold Corp. slid at least 4 percent as gold fell for a third day, while most industrial metals also tumbled amid persistent concerns about the strength of demand in China.
Crescent Point Energy Corp. fell 6.9 percent, the biggest drop since January, after the company announced Thursday a secondary stock offering. The funding will be used to accelerate drilling and boost activity. Enbridge Inc. and Canadian Natural Resources Ltd. lost at least 1.7 percent.