TSX posts second straight weekly decline as mining shares fall

TORONTO: Canada’s main stock index fell to an eight-day low on Friday, led by declines for metal mining shares, as investors weighed hawkish comments from Federal Reserve Chair Kevin Warsh and doubted that second-quarter strength in Canada’s economy would be sustained.

The S&P/TSX Composite Index ended down 280.33 points, or 0.8 percent, at 36,553.92, its lowest closing level since August 20.

For the week, the index was down 0.2 percent, adding to its slight decline in the prior week, despite all six major banks reporting stronger-than-expected quarterly earnings.

US benchmark the S&P 500 also lost ground, with investors turning cautious after Warsh reiterated the central bank’s focus on fighting inflation.

Canadian GDP increased at an annualized rate of 3.3 percent in the second quarter after six months of virtually no growth, aided by strong jump in exports and solid domestic demand, while an advanced indicator showed that the economy was largely flat in July.

“The breakdown of second-quarter GDP growth was even better than the solid 3.3 percent annualised gain might suggest, although the preliminary estimate of unchanged GDP in July and the headwinds from new US tariffs means it is unlikely that this momentum will be sustained,” Ariane Curtis, senior North America economist at Capital Economics, said in a note.

The US imposed new 50 percent tariffs on USD20 billion of Canadian imports last Saturday after talks between the two countries collapsed.

The materials group, which includes metal mining shares, gave back some recent gains to end 2.8 percent lower. Gold was down 3.1 percent as traders increased bets on an interest rate hike next month from the Fed.

Energy lost 1 percent as US crude oil futures settled 0.2 percent lower at USD83.40 a barrel on rumors of a possible agreement on shipping through the Strait of Hormuz.