North American markets tumble amid stock ‘fatigue’

A correction in the markets appears very possible as North American stocks deal with “fatigue” in the wake of economic recovery from the 2008 financial crisis. 

A correction in the markets appears very possible as North American stocks deal with “fatigue” in the wake of economic recovery from the 2008 financial crisis.

The Toronto Stock Exchange (TSX) tumbled 200 points and closed below 15,000 September 25 — the first time it has been under that benchmark since March. Meanwhile, this past week U.S. markets sank to their lowest levels in two months.

“It’s a bit of fatigue,” BMO chief investment officer Paul Taylor told Business in Vancouver September 26.

“(The TSX is) a market that’s gone basically straight up without much in the way of a correction in probably 18 months.”

By the close of markets Friday, September 26, the TSX was again hovering just above 15,000. It took six years for the TSX to claw its way back above 15,000 points following the 2008 financial crisis.

Taylor said there are no signs of a crash on the horizon, although a correction in North American markets is very possible.

“We’re entering a bit of a more challenging period,” he said.

“Either the U.S. economy is going to gain a little bit of momentum…or not. And if not, then we have to re-rate stocks backward.”

He added the Canadian economy had been outperforming its southern neighbour’s based on energy prices the last few years, but the U.S. has been pulling away from Canada as energy prices have gone down.

“The reality is we have a North American economy that will expand over the next 12-24 months,” Taylor said.

“This (week’s declines) will be a stopping point on the way to something north of 15,000.”

torton@biv.com

@reporton