Slumping oil prices and an ongoing scandal involving a Canadian mortgage lender dragged down the Toronto Stock Exchange’s main index, which shed nearly 150 points.
The S&P/TSX composite index fell 143.07 points to 15,506.47 — for a two-day loss of 238.72 points.
“The principal issue that’s overhanging the market is the Home Capital Group,” said Tim Morton, senior vice-president and portfolio manager at TD Wealth.
Staff at Ontario’s securities regulator recently alleged that Home Capital (TSX:HCG), two former chief executives and the current chief financial officer broke the law in their handling of a scandal involving falsified loan applications.
The company warned Wednesday that it would miss financial targets and was seeking a credit line, which it secured Thursday to the tune of $2 billion, to offset withdrawals from savings accounts at its subsidiary, Home Trust.
The lender’s shares plummeted nearly 65% or $11.10 Wednesday. They regained some of their value Thursday, rising 33.89% or $2.03 — still a long way from recouping the previous day’s loss.
Read: Home Capital stock rises as it secures credit line
The spillover, said Morton, is that it effected the valuations of Canadian bank stocks on Thursday.
Shares in the financials sector shed an average 1.65% of their worth, but Morton doesn’t expect the losses to stick.
“I think for the major banks this is more noise than anything else,” he said.
The other main drag on the index came from falling oil prices.
The June crude oil contract fell US65¢ to US$48.97 per barrel and energy stocks declined an average of 1.49%.
South of the border, where Morton said the markets are more heavily weighted in well-performing technology and consumer products, indices made small gains.
The Dow Jones industrial average gained 6.24 points to 20,981.33, the S&P 500 index inched forward 1.32 points to 2,388.77, and the Nasdaq composite index rose 23.71 points to a record-high 6,048.94.
The Canadian dollar slipped 0.06 of a U.S. cent to US73.40¢.
Elsewhere in commodities, the June gold contract rose US$1.70 to US$1,265.90 an ounce, the June natural gas contract fell about US3¢ to roughly US$3.24 per mmBTU and the more heavily-traded July copper contract declined three-quarters of a cent to US$2.59 a pound.