Stock markets slide over VW scandal, commodity price swoon
TSX down 288, Dow loses 179, following lead of European stocks
Markets took a hit on Tuesday from falling commodities prices and the widening scandal around Volkswagen's emissions fiddle.
The TSX and the Dow saw triple-digit falls, reversing gains they had made the previous day in the wake of the Fed announcement that interest rates would be unchanged for another month.
The Dow was down 179 points at 16,330 and the S&P 500 fell 24 points to 1,942.
Oil, commodities fall
Commodities prices were falling, with copper down nine cents to $2.30 US a pound and gold declining $8.37 to 1,125.07 US an ounce.
Oil is also waning, with the West Texas Intermediate contract down 85 cents to $45.83 US a barrel.
WTI crude rose four per cent yesterday, lifting it off lows below $45. It has maintained some of that gain, but today traders began to worry again about demand from China, where manufacturing data tomorrow may confirm an economic slowdown.
The Canadian dollar stayed lacklustre, slipping lower to 75.38 cents US.
But the biggest factor roiling markets has been the VW scandal, with the company admitting it cheated on emissions testing. That led to Volkswagen stock falling 34 per cent in the past two days.
VW scandal tarnishes automakers
Other automakers were also pulled lower.
"Although VW may have lost a big chunk of its value, its shares could plunge even further if it is forced to pay a lot more than the 6.5 billion euros ($9.6 billion Cdn) it has set aside to handle the consequences of rigging U.S. emissions tests or if there are criminal charges for VW executives," said Fawad Razaqzada, an analyst at Forex.com.
"And things could turn really ugly if the probe expands to and finds other German carmakers guilty too."
Hong Kong and Shanghai stocks ended higher, but there were widespread losses in Europe, with Britain's FTSE 100 index of down 2.8 per cent at 5,935 and Germany's DAX down 3.8 per cent at 9,570.
A parallel scandal is unfolding in the drugs and biotech sector, where the news that companies were buying up drugs that are in the public domain and raising the price 2,000 to 5,000 per cent has provoked a political reaction.
Presidential candidate Hillary Clinton said she'd take steps to ensure that doesn't happen if she becomes president. That hurt biotech stocks.