“I think it’s a read through that things are definitely slowing down.”
Data have backed that up. China’s manufacturing activity contracted in May while the Canadian economy remained sluggish in the first three months of the year, rising just 0.4 per cent, and giving the weakest back-to-back quarters since 2015.
Investor concerns can be seen in bond yields falling and the yield curve inverting, which heightens concerns about a potential recession.
“Now we’re probably seeing the risk of a recession pick up and the recession would likely be in the next 12 to 18 months,” he said.
Ongoing weak data could also prompt the Federal Reserve and the Bank of Canada to cut interest rates.
“It’s very rare to see rate cuts before recession and perhaps this is a new environment or a less normal environment where perhaps we see rate cuts and we avoid the actual proverbial recession.”
Eight of the 11 major sectors of the TSX decreased on Friday, led by health care, energy and financials.
Energy fell 1.14 per cent as the price of crude dropped to its lowest level since February on worries about reduced global demand and higher supplies.
The July crude contract was down US$3.09 at US$53.50 per barrel and the July natural gas contract was down 9.3 cents at US$2.45 per mmBTU.
That’s bad for Alberta’s oil patch, where Encana Corp. shares lost 4.4 per cent.
The heavyweight financials sector lost more than one per cent with Manulife Financial losing two per cent and Great-West Lifeco Inc. off 1.8 per cent.
Materials led the three sectors that rose, helped by higher metals prices. Barrick Gold shares gained 5.6 per cent.
The August gold contract was up US$18.70 at US$1,311.10 an ounce and the July copper contract was down 1.4 cents at US$2.64 a