TORONTO – Canada’s main stock index closed lower Thursday as mining and telecom stocks weighed, while U.S. stocks were mixed.
The S&P/TSX composite index closed down 22.07 points at 24,551.55 in a divergence from international markets, said Jules Boudreau, senior economist at Mackenzie Investments.
“The Canadian stock market, I would say, is underperforming its global peers. And I think in terms of if we’re looking at today, that’s mostly a material story.”
Boudreau said disappointing news from mining giant Newmont Corp. pushed down both the stock and the wider gold sector.
“Newmont, one of the biggest gold producers, had its earnings yesterday and they were very negative in terms of profit guidance.”
Miners have seen gains as the gold price has climbed significantly in recent months, and it rose further Thursday, but the company’s results show that doesn’t directly translate into higher profits, he said.
“Investors are realizing that the higher gold prices, the companies might have some trouble harvesting that, because it’s tough for them to ramp up production while keeping costs lower.”
Newmont itself closed down almost 15 per cent, while Barrick Gold Corp was down just over two per cent.
Teck Resources Ltd. also weighed on the mining sector as it again lowered its copper production forecast, helping push its stock down 5.4 per cent on the day.
On the Telecoms side, Rogers Communications Inc. closed down almost three per cent after announcing earnings and a deal to sell off some of its infrastructure to pay down debt.
In New York, the Dow Jones industrial average was down 140.59 points at 42,374.36. The S&P 500 index was up 12.44 points at 5,809.86, while the Nasdaq composite was up 138.83 points at 18,415.49.
Markets in the U.S. were generally up as more good news on the economy came in, including jobless claims down and positive Purchasing Managers’ Index data.
The positive economic news would normally lead to a sell-off in bonds, but that was tempered by higher odds of Kamala Harris winning the presidential election, said Boudreau.
“In my view, and I think in the market’s view, a Trump election would mean higher interest rates, higher bond yields across the board. And so, the fact that maybe his odds went down a little bit today means a little bit of a lower interest rate, even though the economic data should say higher interest rate.”
The Canadian dollar traded for 72.23 cents US compared with 72.24 cents US on Wednesday.
The drop in the loonie was slight, but it was notable because most other currencies gained against the U.S. dollar today, said Boudreau. The divergence comes after the Bank of Canada cut its key interest rate by half a percentage point on Wednesday, with more cuts expected ahead given the weakness in the economy.
“Canada’s been in my view, the one of the weakest major economies to start the year,” said Boudreau.
“The Bank of Canada is behind schedule, and I think they’re going to have to cut rates a lot more. Markets are slowly getting used to that reality that we’re going have much lower interest rates in Canada in six to eight months than in the U.S., and that means a lower Canadian dollar.”
The December crude oil contract was down 58 cents at US$70.19 per barrel and the December natural gas contract was up 12 cents at US$3.02 per mmBTU.
The December gold contract was up US$19.50 at US$2,748.90 an ounce and the December copper contract up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 24, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
