TSX drops 525.42 points, or 2.8%, to 18,477.26
Energy collapses by 7.5%; oil settled by 5.7% less
The Canadian dollar hit a 2-year low at 1.3612
Canadian retail sales drop 2.5% in July
TORONTO, Sept. 23 (Reuters) – Canada’s leading, resource-rich stock index fell to its lowest level in more than two months on Friday and the Canadian dollar extended its recent dip as oil prices plummeted and investors fell. become more concerned about the prospects for the world economy.
The Toronto Stock Exchange’s S & P / TSX composite index fell 525.42 points, or 2.8%, to 18,477.26, the lowest since July 15.
Major Wall Street indices also fell sharply, but not as much as the Toronto market.
For the week, the TSX was on track to lose 4.7%, which would be its largest weekly drop since June as concerns over the economic impact of the central bank tightening overshadowed internal data showing an easing of inflationary pressures.
The index has fallen around 16% since its record close in March.
“It is the realization that we are seeing a general slowdown in the global economy,” said Philip Petursson, chief investment strategist at IG Wealth Management. “This is making its way towards lower commodity prices.”
Oil prices stabilized 5.7% at $ 78.74 a barrel, an eight-month low, as the U.S. dollar reached its strongest level in more than two decades, while copper and copper prices gold fell.
The energy group of the Toronto market fell by 7.5%, while the materials group, which includes precious and base metal miners and fertilizer companies, fell 4.3%. Together, these two groups account for nearly 30% of the TSX’s weight.
Internal data showed retail sales fell 2.5% in July, more than expected, indicating that Bank of Canada interest rate hikes are slowing consumer spending.
This has increased the pressure on the Canadian dollar. It fell 0.8% to 1.36 against the greenback, or 73.53 USD cents, after hitting its weakest intraday level since July 2020 at 1.3612.
Meanwhile, Canadian bond yields have fallen along a much flatter curve. The 10-year fell 5.9 basis points to 3.069%, revealing part of the recovery since June.
Rising yields in recent weeks could make bonds “an attractive opportunity over the next 12-36 months,” Petursson said. “While yields may continue to rise, you are seeing a coupon that will absorb at least some of it.” (Reporting by Fergal Smith; Additional reporting by Susan Mathew in Bengaluru; Editing by David Gregorio)