The S&P/TSX composite index finished the last trading day of May down 92.91 points at 15,014.09, with the energy sector one of the few bright spots as oil prices turned sharply higher. Overall, it was a losing week on the Toronto Stock Exchange, which gave back a net 186 points.
The loonie lost 0.01 of a U.S. cent to 80.41 cents.
New York markets also finished the week lower than where they began, as the Dow Jones industrial average closed down 115.44 points at 18,010.68, while the Nasdaq fell 27.95 points to 5,070.03 and the S&P 500 declined 13.40 points to 2,107.39.
Statistics Canada says the economy contracted at an annual pace of 0.6 per cent in the first three months of the year as weaker oil prices had a more severe impact than economists expected.
It is the first time real GDP has dipped below zero since the fourth quarter of 2011 and the biggest slide into negative growth since the second quarter of 2009.
The U.S. economy also contracted in the first quarter with gross domestic product weakening 0.7 per cent, far worse than the government's initial estimate of growth of 0.2 per cent.
Ian Riach, senior vice-president and portfolio manager at Franklin Templeton Institutional, said that while first-quarter GDP was disappointing, indicators as early as April showed things were beginning to turn around, especially south of the border.
"I don't think growth is robust by any stretch of the imagination, either in the U.S. or Canada, but I think the odds are that it will probably be positive going forward from here to the end of the year."
That said, Riach said that "Canada is still hugely affected by what is going on in the energy patch and there is still a lot of uncertainty there despite the run-up in price today a little bit."
In commodities, oil prices got a boost after data showed U.S. crude oil inventories declined more than anticipated. The July crude contract rose $2.62 to US$60.30 a barrel but remains well below the highs of US$107 last summer.
August gold gained $1 to US$1.189.80 an ounce.
Next week, investors will take a number of important economic data, including jobs reports Friday in both Canada and the U.S. Meanwhile, debt-plagued Greece faces an important payment deadline to the IMF on Friday.
Riach was not overly concerned at this point, however.
"I don't want to minimize it, but these things tend to work themselves out over time," he said. "They were able to pull something out of the hat for their last payment (and) there's talk that they're going to do something creative next week to make the June 5th payment. So that's not really the drop-dead date like a lot of people have been thinking."