Roundup: Canadian stock market plunges following weak GDP data

Canada's main stock market in Toronto on Tuesday took a nosedive with a triple-digit loss after the official data confirmed that the Canadian economy contracted for a second consecutive quarter.

Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index tumbled 377.22 points, or 2.72 percent, to 13,481.90 points on the closing bell, another big drop within a week after Aug. 24, when the index lost 420.93 points.

Losers were seen across the eight most weighed sectors when the latest economic growth data from Statistics Canada on Tuesday showed that real gross domestic product (GDP) declined 0.1 percent in the second quarter, following a 0.2 percent decrease in the first quarter, which means Canada was in a "technical recession" during the first half year.

The federal agency said the mining, quarrying and oil and gas extraction sector posted a notable decrease by 4.5 percent, down for a second consecutive quarter.

The TSX index plunged sharply following the GDP data, when resources shares suffered biggest losses, with the mining sector diving 7.23 percent and the energy sector shrinking 4.58 percent.

The leading companies from both sectors were in the negative territory. The basic metals producer First Quantum Minerals Ltd. vapored 10.5 percent to 6.14 Canadian dollars (about 4.64 U.S. dollars) a share, while Canadian Oil Sands Ltd. plunged 10.39 percent to 6.9 Canadian dollars per share.

And the most influential sector Financials lost 2.8 percent, with Royal Bank of Canada going down 2.74 percent to 71.33 Canadian dollars a share.

According to a report released by this bank Tuesday, although two quarters of declining GDP data were often associated with recessions, a recession also needs to entail broad-based weakness.

The TSX was also weighed by the downbeat factory data from China, the second biggest economy in the world. According to official data released Tuesday morning, China's manufacturing purchasing managers' index (PMI) came in at 49.7 in August, down from 50 for July and the lowest since August 2012.

Investors were concerned about China's falling demand for commodities including oil and copper, if the country's economic growth keeps on falling. And as a resource-dependent country, Canada may face more pressure from the shattering oil prices.

However, the data from Statistics Canada on Tuesday also showed that the monthly GDP was up 0.5 percent in June.

This is providing positive momentum to start the second half of the year, according to Brian DePratto, an economist from TD Bank, who believed the economy will rebound sharply in the third quarter, with growth expected to reach around 2.5 percent on a year-over-year basis.

On the currency front, the Canadian dollar on Tuesday lowered to 0.7563 U.S. dollar, when compared with 0.7601 U.S. dollar Monday. Endit