The Canadian Press
Published Tuesday, December 4, 2018 5:37 EST
Updated Tuesday, December 4, 2018 5:40 PM EST
TORONTO – North America markets have plunged on Tuesday as a bond market movement denotes a potential recession in advance, encouraging decline in the key industrial, energy and financial sectors.
The products on Treasury notes two and three years exceeded five-year notes in a partial curve collision that often respect the recession in the coming years, says the CIBC Asset Management portfolio manager Craig Jerusalim.
"The market co-ordinates have a higher risk of recession and as a result risk assets are being sold across the board," he said.
In addition, the Treasury note moved two and 10 years to its fastest time since 2007.
Historically, the reverse of those notes usually takes place between six and 12 months before the recession.
"So this partial collision does not necessarily mean that the clock has started to tick again," he said in an interview. "It's a possible sign for what could come."
In addition, markets dropped enthusiasm on China-U.S. Trade agreement following comments of both sides and continuous sound for Brexit, Jerusalim added.
The S & P / TSX composite index suffered the biggest daily loss in six weeks since it closed 211.39 points to 15,063.59.
All sectors fell but telecommunications and utilities, led by a 4.59 percent reduction in healthcare, followed by industrial, energy, technology, consumer, consumer and financial industries.
Healthcare dropped as Aphria Inc contributed to a further 21 percent due to a short-seller report targeting its recent Latino American acquisitions and raising questions about its operations in the region.
Despite strong quarterly results, BMO shares deducted when the bank did not achieve its operational level targets.
Meanwhile, Teck Resources Ltd won 2.1 per cent after selling part in its copper mining project from Chile which will allow the Vancouver company to continue to have a positive cash flow.
Higher prices for oil and gold also partially offset the reductions on the TSX.
January's raw contract was higher than 30 cents at US $ 53.25 per barrel and January's natural gas contract was higher than 11.8 cents at US $ 4.46 per mmBTU.
The February gold contract was higher than US $ 7.00 at US $ 1,246.60 each and the March copper agreement down 5.05 cents at US $ 2.76 per pound.
Canada averaged an average of 75.65 cents in the United States compared to an average of 75.81 cents in the United States on Monday.
In New York, the industrial average of Dow Jones dropped by 3.1 per cent by losing 799.36 points at 25,027.07. The S & P 500 index down was 90.31 points at 2,700.06, while the Nasdaq compound had lost 3.8 percent or 283.09 pointing to 7,158.43.
There are potential negative catalysts to become another US Federal Reserve rate hike and a job report on Friday. The US markets are closed on Wednesday for a national day of mourning to former President George H.W. Bush.
"Investors have been keen on this whole earnings season," Jerusalim said.
"Any company that has shown any signs of disappointment has been unduly punished and I believe that there is only one other sign that the market does not have high confidence and that prices have already been contracted and are likely to contract further. "