TORONTO -- Stock markets in Toronto and New York fell Thursday as the price of oil dropped below US$27 a barrel and uncertainty over the global economy continued to fester.
The S&P/TSX composite index was down 98.28 points at 12,087.44 at the close.
It's the fifth straight day of losses for the resource-heavy market, which felt downward pressure from nearly all sectors, especially banks and base metal stocks.
The Canadian dollar gained 0.06 of a U.S. cent to 71.83 cents US, even as the March contract for benchmark North American crude oil lost $1.24 to settle at US$26.21.
Ian Nakamoto, director of research at 3MACS, said investor confidence in oil has waned because no one is certain how much lower prices will go.
"I'm trying to think -- what is going to turn this around basically?" he said. "Obviously there has to be a large supply response from one of the Middle Eastern countries but it doesn't seem to be happening any time soon. It's just a matter of confidence."
Sun Life chief investment officer Sadiq Adatia added that some investors are also getting comfortable with these unsustainable rock-bottom oil prices, which will no doubt lead to the closure of smaller oil firms.
"At prices of US$26 (a barrel), there are very few companies, countries out there, that can make money on current production, let alone new production. There's almost nobody who can make money at this price," he said.
"That means that supply will come offline but how long will it take for it to come off and when it does, then you'll see a boost up in oil prices. Still we're still a few months away from that happening."
Meanwhile, while some may be fleeing oil, many are still investing in gold as a safe haven from volatile equities. April bullion got a boost of $53.20 to US$1,247.80 a troy ounce.
Elsewhere in commodities, March copper was down two cents at US$2 a pound and the March contract for natural gas dipped five cents to US$1.99 per mmBtu.
In New York, the Dow Jones industrial average plunged 254.56 points to 15,660.18, while the broader S&P 500 declined 22.78 points to 1,829.08 and the Nasdaq edged 16.75 points lower to 4,266.84.
Federal Reserve chairwoman Janet Yellen said during her second day of testimony to Congress that the Fed will discuss the effects of the global slowdown on the U.S. economy at its next meeting in March.
On Wednesday, she had expressed caution over how global pressures could depress U.S. economic growth, which could slow the pace of Fed interest rate hikes. The U.S. central bank raised rates late last year after having held them near zero since the Great Recession.
