Canadian bank stocks slid the most in more than two years as the first round of earnings from US lenders weighed on the outlook for the financial sector amid growing fears of a recession.
Royal Bank of Canada, the nation’s largest lender, sank 5.6 per cent, the most since March 2020 when the pandemic devastated markets. It has plunged 20 per cent since its record high in January. Bank of Nova Scotia and Toronto-Dominion Bank slumped as much as 3 per cent and 2.1 per cent respectively. Canadian lenders are due to report earnings next month.
The two US banks reported worse-than-expected second-quarter earnings, with JPMorgan suspending share buybacks to bolster its capital buffer. It also added US$428 million for potential sour loans, reflecting “a modest deterioration in the economic outlook.” Meanwhile, Morgan Stanley investment banking revenue plunged 55 per cent, more than the 47 per cent that analysts predicted, as capital markets activity slowed.
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