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Noah Zivitz

Managing Editor, BNN Bloomberg

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The S&P/TSX Composite index fell the most in almost two years on Monday as investor fears about the outlook for growth put Canada’s benchmark stock index on the brink of a correction.

The TSX shed 633.6 points to close at 19,999.69. It’s the first time the index has closed below 20,000 points since last June. Monday’s drop worked out to a loss of 3.07 per cent, which was the steepest single-day decline since the TSX plunged 4.14 per cent on June 11, 2020.

It’s been an abrupt reversal for Canadian stocks, along with markets around the world, as central banks’ efforts to contain inflation, Russia’s invasion of Ukraine, and China’s attempt to curb the spread of COVID-19 all cast a cloud on the global economy.

It’s not that long ago that the TSX was setting all-time highs; after Monday’s loss, the index has dropped 9.45 per cent since the record high that was set on March 29. A drop of 10 per cent is what’s commonly defined as a correction.

Only 26 stocks on the TSX Composite Index closed higher Monday, while 211 fell and two were flat. The most influential drags were Nutrien Ltd., Canadian Natural Resources Ltd., and Shopify Inc.; combined, they accounted for 130 of the points that were stripped off the index Monday.

The selling pressure was even more severe in the U.S., as the Nasdaq Composite Index sank 4.29 per cent and the S&P 500 fell 3.2 per cent to open the week.

“I’m not sure we’re all the way there (to capitulation) — we’re certainly working toward it,” said Brian Levitt, Invesco’s global market strategist, in an interview.

“All of this came about amid a very unique pandemic cycle in which inflation just kept rising. … The uncertainty around policy tightening is causing significant damage to the markets and ultimately what we need to see is a change in the direction of inflation.”

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