TORONTO – Canada’s main stock index closed lower Monday in a broad retreat that outweighed gains in energy stocks, while U.S. stock markets also fell on a weakened outlook for interest rate cuts.
Markets were down across the board as investors continued to digest the big job numbers beat in the U.S. that came out Friday, which has forced a rethink on how quickly the U.S. Federal Reserve will cut rates, said Kathrin Forrest, equity investment specialist at Capital Group.
“That was certainly one of the big stories, certainly today but pretty much last week as well.”
She noted how the signs of a still-robust U.S. economy has helped push up U.S. 10-year treasury yields from 3.71 per cent a week ago to over four per cent Monday.
“That’s pretty meaningful.”
The shift means markets are now betting on a quarter-point rate cut at the next U.S. Fed decision, rather than a bigger reduction.
The outlook helped push the Dow Jones industrial average down 398.51 points at 41,954.24. The S&P 500 index was down 55.13 points at 5,695.94, while the Nasdaq composite was down 213.95 points at 17,923.90.
Meanwhile, the S&P/TSX composite index was down 60.12 points to close at 24,102.71.
The main outlier in markets were energy companies as crude prices continued to rally because of instability in the Middle East.
The November crude oil contract was up US$2.76 at US$77.14 per barrel on Monday, having climbed from under US$70 per barrel at the start of the month.
Rising crude prices helped lead the S&P/TSX energy index up 1.9 per cent. The rise included a 3.3 per cent gain for Canadian Natural Resources Ltd., which also announced it was buying Chevron Canada Ltd.‘s interests in the Athabasca Oil Sands Project and Duvernay shale for US$6.5 billion.
Utilities saw some of the steepest losses as the S&P/TSX subindex was down 1.6 per cent.
Investors will get another hint next week at where rates might be going as both Canada and the U.S. are set to release inflation data on Oct. 15.
“Inflation, in the U.S. in particular, absolutely worth watching,” said Forrest.
The Canadian dollar traded for 73.48 cents US compared with 73.65 cents US on Friday.
The November natural gas contract was down 10 cents at US$2.75 per mmBTU. The December gold contract was down US$1.80 at US$2,666 an ounce and the December copper contract was unchanged at US$4.57 a pound.
This report by The Canadian Press was first published Oct. 7, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
