The TSX experiences its biggest drop in three months, the Canadian dollar slides due to the oil crisis.


The Toronto Stock Exchange’s S&P/TSX composite index ended down 521.70 points, or 2.8%, at 18,480.98, its biggest drop since June 16 and its lowest closing level in addition to two months.

The main indices on Wall Street also closed sharply lower, but not as much as the Toronto market. (.N/C)

For the week, the TSX fell 4.7% as concerns over the economic impact of central bank tightening clipped national data showing easing inflationary pressures. The index has fallen about 16% since its record close in March.

“It’s the realization that we’re seeing a general slowdown in the global economy,” said Philip Petursson, chief investment strategist at IG Wealth Management. “This is reflected in lower commodity prices.”

Oil prices fell 5.7% to $78.74 a barrel, an eight-month low, as the U.S. dollar hit its highest level in more than two decades, while copper and the gold fell.

The Toronto market’s energy group fell 7.8%, while the materials group, which includes precious and base metal miners and fertilizer companies, lost 4.5%. Together, these two groups represent almost 30% of the weighting of the TSX.

National data showed retail sales fell 2.5% in July, which was more than expected, indicating that the Bank of Canada’s interest rate hikes are slowing consumer spending.

This added pressure on the Canadian dollar. It was down 0.7% at 1.3580 for the greenback, or 73.64 US cents, after touching its lowest intraday level since July 2020 at 1.3612.

Meanwhile, Canadian bond yields have stretched across much of a flatter curve. The 10-year was down 4.8 basis points to 3.080%, erasing part of the rise recorded since June.

This rise in yields over the past few weeks could make bonds “an attractive opportunity over the next 12 to 36 months,” Petursson said. “While yields may continue to rise, you see a coupon that will at least absorb some of that upside.”



Source link -88