CANADA STOCKS-TSX hits 2-week low as Delta variant tests rates outlook

  • 8/17/2021
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(Adds investor quotes and details throughout, updates prices) * TSX closes down 0.6% * Posts lowest close since Aug. 4 * Financials fall 0.7%; energy ends down 1.2% * U.S. oil settles 1% lower TORONTO, Aug 17 (Reuters) - Canada’s main stock index fell for a fourth day on Tuesday, as the spreading Delta variant of the coronavirus contributed to a more uncertain outlook for global economic growth and interest rates. The Toronto Stock Exchange’s S&P/TSX composite index ended down 119.83 points, or 0.6%, at 20,363.59, its lowest close since Aug. 4. “The Canadian market consists of more value based stocks which benefit more from a rising (interest) rate environment,” said Ben Jang, a portfolio manager at Nicola Wealth. “With the Delta variant causing a shutdown in (a) large Chinese port and now with the short shutdown of New Zealand, the market is re-evaluating the path for rates.” Signs that the global economic recovery is slowing could reduce prospects of the Federal Reserve dialing back its bond purchases over the coming months. Data on Tuesday showed U.S. retail sales falling more than expected in July. The interest-rate sensitive financial services sector, which accounts for about 30% of the TSX’s market capitalization, fell 0.7%, while resource shares also declined. The energy group was down 1.2% and the materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.4%. U.S. crude futures settled 1% lower at $66.59 a barrel, extending recent declines, and copper was down 2.7%. The TSX has advanced nearly 17% since the beginning of the year, buoyed by soaring earnings growth. As recently as last Friday, it touched a record intraday high of 20,567.11. “With the resurgence of COVID around the world ... we’re seeing the reopening stocks start to pull back,” said Allan Small, senior investment adviser at Allan Small Financial Group. Consumer discretionary stocks fell 1.4%, while industrials ended 0.4% lower. Lithium miner Lithium Americas Corp was the biggest decliner on the TSX, down 9.4%. (Reporting by Fergal Smith; Editing by Sandra Maler) Our Standards: The Thomson Reuters Trust Principles.

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