By Bansari Mayur Kamdar
(Reuters) – Canada’s benchmark index extended losses for a third straight session on Tuesday, as weakness in energy and metal prices due to rising COVID-19 cases in China weighed on commodity stocks.
At 10:00 a.m. ET (1400 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 161.23 points, or 0.76%, at 21,019.55.
The energy and materials sectors fell 4.4% and 1.4% respectively, tracking weakness in commodity prices.
Oil prices dropped to three-week lows and industrial metal prices fell as daily COVID-19 infections in major consumer China doubled from a day earlier to hit a two-year high. [O/R] [MET/L]
“We’re going to have a volatile year so there’s going to be lots of moving parts,” said Greg Taylor, portfolio manager at Purpose Investments.
“TSX is definitely overweight in commodities versus other indices so as long as inflation’s a theme it should set the TSX to outperform.”
The commodity-heavy Toronto index has declined 1.1% so far this year, but has outperformed many of its global peers like the U.S. benchmark S&P 500, which is down 11.8% year-to-date, as investors embraced commodity stocks to protect their portfolios from the impact of supply shortages and soaring inflation.
Investors await key consumer price data due later in the week, while the U.S. Federal Reserve’s policy meeting due on Wednesday was also in focus.
“There’s probably not going be much volume today as investors are waiting for the Fed’s signals and see if we get any relief in the move higher in yields and the U.S. dollar,” Taylor said.
Data showed that home prices surged to a new all-time high last month and housing starts rose 8% in February compared with the previous month.
Among individual stocks, Canadian Pacific Railway Ltd fell 0.8% after thousands of workers threatened to strike from Wednesday, potentially disrupting the movement of grain, potash and coal at a time of soaring commodity prices.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)
