The TSX Composite fell 0.44% to 34,969.26 on Thursday, its second straight decline after setting a string of record closes earlier in the week. Energy stocks led the index down, falling 2.9% as oil prices dropped on the ceasefire between the United States and Iran. Materials stocks fell 0.9% as gold slid on the same Federal Reserve dot plot that has weighed on markets all week.
A Two Sector Hit, Named by the Person Trading It
Greg Eckel, portfolio manager at Canadian General Investments, described Thursday's session as a two sector hit, falling oil pressuring energy stocks at the same time higher rate prospects weighed on gold. Both sectors carry meaningful weight on the TSX, which is why a move in either one shows up directly in the index.
Canadian Natural Resources fell 4.1% to $60.80 as the Hormuz reopening erased the supply premium that had supported it. Gold miners fell across the board on the Fed's hawkish signal and a stronger US dollar: Torex Gold dropped 4.30%, Eldorado Gold fell 3.85%, Agnico Eagle Mines lost 3.66%, and Seabridge Gold declined 3.35%, putting four of the index's sharpest single day decliners inside one sector.
What Held the Index Up
Four of the ten TSX sectors closed lower, which means six did not. A 0.7% gain in industrials did most of the work limiting the broader decline, led by Toromont Industries, up 15.1% after the equipment manufacturer announced an update to its power systems business. It was the single biggest percentage move on the TSX that day, and it had nothing to do with either oil or the Fed.
Elsewhere among the day's gainers, MDA Space rose 3.97%, Brookfield Business Corporation added 3.63%, Bombardier gained 3.11%, and RB Global rose 3.03%, a spread of names across aerospace, industrials, and equipment that absorbed some of the pressure coming from energy and materials.
What This Sets Up Heading Into Friday
Early Friday trading showed the index roughly flat as energy gains offset continued gold weakness, a partial reversal of Thursday's pattern rather than a continuation of it. TD Economics published a note this week expecting the Bank of Canada to hold through year end, putting it on the more cautious end of a forecast range that also includes Scotiabank's call for a fourth quarter hike, a divergence HDQ's Economy desk covers in full today.
Ten names captured most of Thursday's story, one of them for reasons that had nothing to do with either oil or the Fed.
Toromont Industries rose 15.1% on a company specific update to its power systems business, unrelated to the broader market move. The remaining names reflect the two sector hit Greg Eckel of Canadian General Investments described, energy and gold miners moving together on oil and Federal Reserve news.