Stocks Slump As IMF Sounds Alarm On Housing -- Canadian Commentary

(RTTNews) - Canadian stocks nudged lower Wednesday, after the International Monetary Fund warned of a potential bubble in Canadian housing.

"Households are highly indebted and housing affordability, particularly in Vancouver and Toronto, has become a social issue with many first-time buyers priced out of the markets," the IMF's report said.

"A sharp correction in the domestic housing market could impair bank balance sheets, trigger negative feedback loops in the economy and lead to contingent claims on the government," the IMF added. "Financial stability risks could emerge if the housing market correction is accompanied by a severe recession."

Earlier in the day, Stats Canada said Canada's economy accelerated in the first quarter to a 3.7 percent annualized pace.

Still, markets were unenthused, distracted by falling oil prices. The TSX Composite Index dropped 22.44 points, or 0.15 percent, to 15,349.91.

Asanko Gold Inc (AKG.TO) plunged 13.10% after Muddy Waters said they would short the stock due to liquidity risks.

National Bank (NA.TO) boosted its dividend after announcing its quarterly profit skyrocketed 120%. Shares were up 0.5 percent. All of Canada's big banks have turned in strong quarterly earnings, but investors remain concerned about exposure to housing.

WTI light sweet crude oil for July fell $1.34, or 2.7%, to settle at $48.32/bbl. Prices slipped to their lowest in three weeks, having lost 2% in the month of May.