North American markets fell dramatically on Thursday because of concerns out of China that forced two major stock markets there to close early.
The Toronto Stock Exchange dropped 278 points to end the day at 12,448.21 while the Dow Jones Industrial plummeted nearly 400 points to 16,514.10.
The bleak trading day prompted comments from Bank of Canada Governor Stephen Poloz, who said there’s not much the government can do to change things.
“There’s simply nothing that a policy maker can do about the price of oil. The price of oil has gone down and so the adjustments that are thrown up by that simply have to happen,” he said. “As I’ve said all along, it’s all about when do the positives that we can already see in the other 80 percent of the economy become the dominant part of the story? Because the negatives from the energy sector are still quite present.”
There are some measures to cushion the blow of falling commodity prices like oil prices, he said, but things will have to work themselves out.
The price of oil sank to its lowest level in 12 years this morning over worries that there will be a lower global demand for energy.
However, Poloz noted that he doesn’t think what’s happening on Chinese markets is an accurate reflection of what’s happening with the country’s economy.
“The stock market is a lot more volatile than its fundamentals. So we shouldn’t necessarily look at volatility in their stock market as indicative of something substantial happening underneath the surface in their economy.”
The loonie, meanwhile, dipped below 71 cents US to close at 70.94 cents US, a number that Poloz says is roughly the same as over a decade ago.