Toronto’s main stock index fell sharply on Monday as oil and other resource-based commodities tumbled after Greek and French election results rattled investors. Euro zone debt fears escalated after incumbent governments in France and Greece lost their reelection bids on Sunday.
Market watchers were concerned that the new governments may not have the stomach for painful austerity measures seen as key to tackle the region’s debt crisis.
“The uncertainty there will probably weigh on sentiment for some time still,” said Robert Kavcic, an economist at BMO Capital Markets.
Kavcic added the Greek situation was a bit more pressing, as it was unclear “whether or not they’re going to be able to meet the demands necessary to maintain their bailout funding.”
The heavily weighted materials and energy groups both fell more than 1 percent, leading Canada’s broader index lower as base metals and gold prices slid and oil hit a four-month low below $113 a barrel on Monday.
Among material stocks, the most influential decliners included top fertilizer producer Potash Corp, down 1.4 percent to C$41.74, copper miner Teck Resources, down 2.6 percent at C$33.90 and top gold miners Barrick Gold , which fell 0.7 percent to C$37.43, and Goldcorp , down 1.3 percent to C$35.96.
Inmet Mining shares fell more than 7 percent to C$46.59 after the Toronto-based miner’s long-awaited engineering study on its Cobre Panama copper-molybdenum project in Central America pegged development costs for the asset at $6.2 billion.
At 10:50 a.m. (1450 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 77.96 points, or 0.7 percent, to 11,793.27.
It touched a fresh 2012 low at 11,785.74. Energy losses were led by Canadian Natural Resources , down 1.4 percent to C$31.28, Suncor Energy, down 0.8 percent to C$29.93, and Cenovus Energy, which slipped 1.3 percent to C$31.77.
Positive Canadian housing data on Monday helped pare some losses. Statistics Canada said the value of building permits rose by 4.7 percent in March, beating the average forecast in a Reuters poll that called for a 2.8 percent drop.
Despite the uncertainty in Europe, financial shares were flat as Canada’s major banks were still performing well. Bank of Nova Scotia led the sector’s slight gains, up 0.5 percent to C$53.04.
“The Canadian banks are always perceived as a relative safe haven and that perception gets magnified when we have problems on the other side of the Atlantic,” said Kavcic.