Canada’s main stock index fell 1% on Friday as a rise in the US dollar following the release of higher-than-expected US jobs figures put pressure on mining stocks, while investors expected increased volatility in the coming months.
The Toronto Stock Exchange’s S&P/TSX Composite Index ended down 222.10 points at 22,007.00. For the week, the index lost 1.2%, its third consecutive weekly decline.
The materials group, which includes metal miners and fertilizer companies, fell 4.2%, with the price of gold falling 3.7% and copper hitting its lowest level in a month.
“Gold is sensitive to the U.S. dollar and real interest rates,” said Joseph Abramson, co-head of investments at Northland Wealth Management.
The U.S. dollar and bond yields rose after the U.S. economy added 272,000 jobs in May, suggesting the Federal Reserve may take time before beginning its easing cycle.
The Toronto market has gained 5% this year, while the S&P 500 in the United States has seen even bigger gains.
“After strong gains, we are taking some profits as we expect risk aversion to increase leading up to the US election,” Mr Abramson said.
President Joe Biden and former President Donald Trump will face off in the Nov. 5 U.S. presidential election in what is expected to be a divided and hotly contested contest.
The monthly Canadian employment report was also released. It shows the unemployment rate rose to 6.2% in May and wage growth accelerated, providing a mixed signal for the Bank of Canada.
On Wednesday, the Bank of Canada became the first G7 central bank to reduce borrowing costs.
Energy also lost ground, falling 0.9%, as oil prices gave up earlier gains to settle 2 cents lower at $73.53 a barrel.
Real estate and utilities, two sectors particularly sensitive to bond yields, fell 1.6% and 1%, respectively. (Reporting by Fergal Smith in Toronto and Purvi Agarwal in Bengaluru; Writing by Ravi Prakash Kumar, Shreya Biswas and Cynthia Osterman)
