Monday, August 8

TSX nears recent 15-month low as commodity prices fall


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TORONTO — Canada’s main stock index fell on Wednesday, moving closer to the bottom of its recent range, as weakness in oil and gold prices weighed on commodity stocks amid growing worries of a global recession.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 104.50 points, or 0.6%, at 18,729.66. In June, it touched its lowest closing level in 15 months at 18,717.12.

“There is a major unwinding of extreme commodity exposure,” said Edward Moya, senior market analyst at OANDA in New York. “More aggressive (central bank) tightening and perhaps further weakness with commodities is unnerving a lot of investors.”

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Resource shares account for 30% of the TSX’s market capitalization.

A deteriorating inflation situation and concern about lost faith in the Federal Reserve’s power to make it better prompted US central bank officials to rally around an outsized interest rate increase, minutes of the June 14-15 policy meeting showed.

The Bank of Canada has also been tightening aggressively. The central bank is set to raise its overnight rate by a hefty 75 basis points next week and by another 50 in September, front-loading a campaign to take monetary policy to where it will restrain the economy, a Reuters poll showed.

The energy sector fell 3.9% as oil prices extended recent declines on worries energy demand would take a hit in a potential global recession. US crude oil futures fell nearly 1% to $98.53 a barrel.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.3% as gold prices fell, while consumer discretionary ended 1.8% lower.

Shares of Shaw Communications Inc declined 3.3%. Rogers Communications said that talks with Canada’s antitrust authority to discuss possible remedies to the blocked C$20 billion ($15.3 billion) takeover of Shaw did not result in a resolution.

Industrials were a bright spot, rising 0.7%. (Reporting by Fergal Smith; Additional reporting by Bansari Mayur Kamdar in Bengaluru Editing by Alistair Bell)



financialpost.com