CANADA STOCKS-TSX falls as Fed downside risk weighs on mining stocks
(Adds investor quotes and details throughout, updates prices)
* The TSX ends down 0.4%
* The materials group drops by almost 3%
* Energy ends down 0.9%
* The prices of gold and copper are falling
By Fergal Smith
TORONTO, Sept. 16 (Reuters) – The main Canadian stock index fell on Thursday, dragged down by the drop in mining stocks, as investors assessed the Federal Reserve’s prospects of reducing its huge stimulus and awaited the outcome of the federal election in the next week.
The Toronto Stock Exchange’s S & P / TSX Composite Index ended down 91.69 points, or 0.4%, at 20,602.10.
“There is probably more nervousness about tapering,” said Matt Skipp, chairman of SW8 Asset Management, who nevertheless doubted the Federal Reserve could “say anything to surprise the markets” at this time.
Increased attention was paid to the timing of the Fed’s reduction in asset purchases, as data showed U.S. retail sales unexpectedly increased in August. The Fed is due to make a decision on interest rates next week.
Yields on US government bonds and the US dollar rose, while base and precious metal prices fell, with gold falling 2.2% and copper 3.2%.
The materials group, which includes precious and base metal miners and fertilizer companies, lost nearly 3%. Energy ended down 0.9%.
Foreign investors are increasingly concerned that Monday’s federal election in Canada could lead to a deadlock that is hampering Ottawa’s response to the COVID-19 pandemic and further slowing economic recovery from the crisis.
Another concern for investors is rising inflation, with data showing Wednesday that Canadian inflation accelerated to its highest level since March 2003.
Nonetheless, the Bank of Canada expects inflation to slow as the temporary factors pushing up prices fade away.
“If inflation comes with low interest rates, it’s good for Canadian stocks, it’s good for commodity prices,” Skipp said.
The TSX is up about 18% this year. (Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Peter Cooney)