The S&P/TSX Composite fell 247.92 points, or 0.69%, to 35,928.63 on Monday, the day Statistics Canada reported September CPI at 3.1%. Declining stocks outnumbered advancing ones 579 to 362 on the Toronto Stock Exchange, and TSX futures pointed 0.2% lower ahead of Tuesday trading.
The index is still up 13.29% year to date and 0.74% over five days. Wall Street diverged: the S&P 500 rose 31.29 points to 7,690.73 and the Nasdaq gained 290.85 points to 26,430.89, while the Dow Jones Industrial Average slipped 36.38 points to 51,966.03.
Rate-Sensitive Sectors Led the Decline
Telecoms, utilities and real estate led the losses, the three groups with the largest sensitivity to bond yields. Base metals led the early decline, with shares down about 1.6% in the morning. Air Canada fell 3.23%, Lundin Gold dropped 2.99% and Energy Fuels lost 3.83%, while Allied Properties REIT fell 4.40%.
Gains were concentrated in resource names. Orla Mining rose 7.34%, Spartan Delta gained 4.93% to close at $14.68, 5N Plus added 4.19% and Kelt Exploration climbed 3.14% to $11.82. Both Spartan Delta and Kelt are oil and gas producers, and Brent held at $109.55 on Monday, within 31 cents of a five-month high.
The Canadian dollar closed at 70.94 US cents, up from 70.65 on Friday. December crude settled at $98.54 a barrel, down 48 cents, and December gold fell $21 to $4,160.10 an ounce.
The Range Has Held for Four Weeks
The TSX has closed between 35,042 and 36,336 in each of the last 21 sessions, a spread of 3.7%, and Monday close sits 0.3% above the September 18 close of 35,807. Five sessions in that stretch moved the index by more than 1%: a 1.61% decline on September 23, a 1.70% decline on October 7, a 1.48% gain on October 9, a 1.11% decline on October 14 and a 1.55% gain on October 15.
The October 19 close is plotted without open, high, low or volume, which were not published at the time of writing. The September 18 volume of 628.42 million shares fell on the quarterly options expiry.
Volume has stayed near 264 million shares a day, excluding the September 18 expiry, and it peaked at 297.98 million on October 13. The index closed on Friday at 36,176.55, near a four-week high, and the five-day moving average now sits at about 35,962, below Friday close.
The Calendar Behind the Next Move
Four events in the next ten days can break the range. Egypt votes on October 26 on authorizing its armed forces to support Saudi Arabia against the Houthis. The Federal Reserve meets on October 27 and 28, with futures pricing roughly 87% odds of a hold. The Bank of Canada decides on October 28 with a new Monetary Policy Report, and US midterm elections follow on November 3.
The Canadian two-year yield closed at 3.21% on October 16, 96 basis points above the 2.25% policy rate, and BMO, RBC and Desjardins now forecast a hike to 2.5%. A hold would remove that premium from the front end of the curve. A hike would reinforce it, with utilities, telecoms and real estate holding the greatest sensitivity to both outcomes.