S & P / TSX composite closes as gold price drops to two-month low


TORONTO – Canada’s main stock index sank mid-week as the materials sector lost ground, with the price of gold falling to its lowest level in two months. The key materials sector, which includes mining and forestry stocks, fell on lower metal prices due to the strength of the US dollar.

The December gold contract was down US $ 39.20 to US $ 1,868.40 per ounce and the December copper contract was down 6.8 cents to US $ 2.99 per pound.

The materials sector lost 5.1% while shares of Silvercorp Metals Inc lost 11.3%, Kinross Gold Corp. fell 10.1% and First Quantum Minerals Ltd. lost 9.5%.

Although there have been recent concerns that the US dollar will lose its safe haven status, it has strengthened in recent weeks amid concerns over more COVID-19 closures in Europe that have hit the euro and the British pound.

The Canadian dollar traded at 74.86 cents US, its lowest level in more than six weeks and compared to 75.13 cents US on Tuesday.

The S & P / TSX Composite Index closed 325.78 points lower at 15,817.11, its lowest level since mid-July.

In New York, the Dow Jones Industrial Average fell 525.05 points to 26,763.13. The S&P 500 Index lost 78.65 points to 3,236.92, while the technology-heavy Nasdaq composite fell 330.65 points or three percent to 10,632.99.

Technology has plummeted to resume its downward march after a strong rally since March.

“I think the technology is retreating further because it has overshot a bit… at the last moment,” said Greg Taylor, chief investment officer at Purpose Investments.

He said there were also concerns that the government may undertake to re-regulate the sector.

“While he has the best business models, I think that also puts a bit of a target on his back,” he said in an interview.

Nine of the TSX’s top 11 sectors were down, led by healthcare and materials.

Healthcare fell 5.2%, with Aurora Cannabis Inc. falling 29.1% after losing $ 3.3 billion last year, including $ 1.86 in its most recent quarter due to significant depreciation charges.

Energy also fell, with Vermilion Energy Inc. and Husky Energy Inc. losing 6.5 and 4.9 percent, respectively.

The November crude contract rose 13 cents to US $ 39.93 per barrel and the November natural gas contract rose 19.7 cents to US $ 2.79 per mmBTU.

The upcoming U.S. election is expected to increase market volatility, Taylor said, as well as the growing likelihood of a second wave of COVID infections.

“The markets have really gotten too euphoric in the summer and certainly in August and we have to give back some of those gains and that really seems to be what is hitting the markets right now. ”

He expects volatility to continue into the second half of the year, which will hurt TSX, which is heavily tied to resources and banks, which depend on the economy reopening.

“I don’t think there will be a big sale here or any reason to put it all in the money, but I think everyone should just expect that there is volatility and that volatility can. be seen as an opportunity. ”

This report by The Canadian Press was first published on September 23, 2020.


Please enter your comment!
Please enter your name here