Bank stocks plunge as household debt fears grow.
October has been a horrendous month for Canadian stocks.
Led by a drop in the financial and marijuana sector, the S&P TSX Composite Index is down 1,179 points as of October 30.
It’s a 6.4% drop for the month, which is the worst since September 2011.
Pot stocks have been doing badly since legalization, with BNN Bloomberg noting “The Canadian market has taken an additional hit from the recent rout in cannabis shares, which began one day before the country legalized recreational pot on Oct. 17. Concerns about high valuations, supply shortages and limited distribution networks in Canada have all hit the stocks.”
The drop in bank shares is due to increasing fears about Canada’s world-highest household debt levels, which are a growing problem as interests rates continue to rise. A recent survey showed 33% of Canadians say they fear bankruptcy due to rising rates, something that will have the banks seriously on edge.
Unfortunately, the Trudeau government’s destructive carbon tax scheme will only add to the burden on households, making the debt issue an even bigger problem.
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