Canada’s main stock index fell to a near four-month low on Wednesday as industrial and financial shares led broad-based declines in a seasonally weak period for the commodity-linked market.
The S&P/TSX composite index ended down 94.4 points, or 0.4%, at 21,516.90 in lower than usual volumes, with U.S. markets closed for the Juneteenth holiday.
It was the lowest closing level for the TSX since Feb. 29. The index is down 3.4% since the start of the month.
Historical seasonal patterns show the TSX is weak in the month of June, said Sid Mokhtari, chief market technician for CIBC Capital Markets.
“There is a tactical buy opportunity for the month of July just given how many things are getting oversold but I don’t necessarily believe we are going to be resuming a re-trending bias (upward) at this point,” Mokhtari said.
The TSX’s recent decline has come despite gains on Wall Street. The benchmark S&P 500 on Tuesday notched a record closing high.
All ten major sectors on the Toronto market lost ground on Wednesday, with industrials falling nearly 1% and heavily weighted financials ending 0.5% lower.
The interest rate sensitive real estate sector lost 0.7% as the Bank of Canada said it considered the merits of waiting for an extra month to start cutting interest rates before it decided to ease monetary policy on June 5.
Energy was down 0.2% as the price of oil retreated from an earlier seven-week high, dipping 0.1% to US$81.47 a barrel.
The Canadian dollar was little changed against its U.S. counterpart, holding near a one-week high, as investors weighed minutes from the Bank of Canada’s latest meeting.
Investors in money markets currently see a 64% chance the central bank will ease further in July.
Canadian government bond yields rose across the curve. The 10-year was up 1.8 basis points at 3.280% after it touched its lowest level in four and a half months during Tuesday’s session at 3.258%.
European shares ended lower, pressured by losses in real estate and technology stocks, while UK stocks were buoyed by metal miners as investors digested its inflation data. The pan-European STOXX 600 closed down almost 0.2%.
Britain’s FTSE 100 reversed earlier losses to close up 0.2%. Data showed UK inflation returned to its 2% target in May for the first time in nearly three years, but underlying price pressures remained strong, meaning the Bank of England (BoE) is likely to wait longer before cutting interest rates.
Reuters, Globe staff
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