Canada's main stock market in Toronto Friday hit a new low in more than two years as the oil price dropped sharply and a newly released mortgage policy tightened the housing loans.
The Toronto Stock Exchange's benchmark Standard & Poor's/ TSX Composite Index vapored 226.64 points points, or 1.74 percent, to settle at 12,789.95 points, with losses seen across the board. And the index refreshed a two-year low since mid-Ocober in 2013.
The Energy sector led the fall by 3.33 percent as oil prices dived Friday amid market's growing concerns that the global crude supplies are exceeding the demand.
The light, sweet crude for January delivery moved down 1.14 U.S. dollars to settle at 35.62 dollars a barrel on the New York Mercantile Exchange on Friday.
Further declines in oil prices this week have fed through to other markets, as the TSX, loonie (the Canadian currency), and government bond yields all fell in a relatively quiet week for domestic data, according to a report issued by TD Economics on Friday.
The oil and gas producer Encana Corporation dropped 6.31 percent to 8.31 Canadian dollars (about 6.05 U.S. dollars ) and Suncor Energy Inc. lost 1.26 percent to 35.22 Canadian dollars per share.
Meanwhile, the mining sector, another resources group, plummeted 3.16 percent as the leading shares First Quantum Minerals Ltd. nosedived 10.12 percent to 4.44 Canadian dollars and Teck Resources Ltd. waned 5.63 percent to 4.86 Canadian dollars apiece.
The most weighed sector Financial dropped 1.69 percent when the government of Canada tightened mortgage policy, as Finance Minister Bill Morneau Friday announced changes to the rules for government-backed mortgage insurance to contain risks in the housing market, saying that effective Feb. 15, 2016, the minimum down payment for new insured mortgages will increase from 5 percent to 10 percent for the portion of the house price above 500,000 Canadian dollars.
Shares of big banks were in the red as Royal Bank of Canada fell 1.56 percent to 72.99 Canadian dollars while Bank of Nova Scotia plunged 2.08 percent to 56.08 Canadian dollars.
However, the impact on housing activity is likely to be relatively modest and short-lived, the new policy aims at cooling down the housing market in some hot cities like Toronto and Vancouver, "on a national basis, we are expecting average existing home price growth to moderate to a low single digit rate next year and to fall modestly in 2017", Diana Petramala, an economist from TD Bank, wrote in a note on Friday.
On the currency front, the Canadian dollar Friday followed the losing streak, trading at 0.7277 U.S. dollar at 4 O'clock (the Canadian Eastern Daylight Time), when compared with 0.7336 U.S. dollar on Thursday.