TSX's decline since mid-month hits 5.75% as gold slides

Reuters
Wed, Sep 27
Key Points
  • The Toronto Stock Exchange's S&P/TSX composite index fell to its lowest closing level in over three months.
  • The decline was influenced by rising bond yields and a drop in gold prices, which weighed on mining shares.
  • Investors are concerned about higher borrowing costs and weaker demand from China.
  • The energy sector was a bright spot, rising due to supply concerns in the oil market.

Canada's main stock index fell on Wednesday to its lowest closing level in more than three months as bond yields continued to climb and a drop in gold prices weighed on mining shares.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 120.17 points, or 0.6%, at 19,435.98, its lowest closing level since June 23.

Since mid-September, the TSX has shed 5.75%, as investors worried about higher borrowing costs and the prospect of weaker demand from major commodity buyer China.

The U.S. 10-year yield was up 5.4 basis points on Wednesday at 4.612%, its highest level in 16 years.

"China is struggling with property issues, aging demographics, and on and off lockdown for the last three years, which does not leave consumers a war chest of money to start spending," said Art Hogan, chief market strategist at B Riley Wealth.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 1.7% as the price of gold fell about 1.3% to $1,876 per ounce.

"Gold is vulnerable to further downside as higher-for-longer (interest rates) gets even more elevated," Edward Moya, a senior market analyst at OANDA, said in a note.

Heavily weighted financials fell 1.2% and interest rate-sensitive utilities ended 3.1% lower.

The energy sector was a bright spot, rising 2.4%, as oil settled 3.6% higher at $93.68 a barrel on supply concerns.

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