The Toronto Stock Exchange fell for a second straight day Wednesday as Bay Street's weighty commodity sector took the brunt of investor negativity.
The S&P/TSX composite index was down 59.72 points, or 0.49%, to 12,042.26. Materials and energy stocks led the decline. Most sectors were down, though financials and industrials were pretty flat.
On the New York Mercantile Exchange, gold was down US$1.80 to $1,256.10 an ounce following some better-than-expected demand for government bonds in Portugal and Poland, which helped ease concern about government finances in Europe. That in turn affected gold's appeal as a safe-haven investment.
Though the decline in gold prices was small, there seemed to be an exaggerated sell-off of gold stocks on the TSX. Barrick Gold Corp. was down 1.52% to $47.20. Goldcorp Inc. declined 1.49% to $43.66.
"You would think that with (the price of) gold bullion where it is, the gold stocks would continue to be strong," said Douglas Davis, CEO of Davis-Rea Ltd. Investment Counsel in Toronto.
The energy sector on the TSX was also negative despite crude oil in New York rising 41¢ to US$74.50 a barrel. Suncor Energy Inc. fell 0.78% to $33.21. Talisman Energy Inc. was down 0.52% to $17.13.
The big economic news in Canada Wednesday was the Bank of Canada's decision to raise its overnight target rate a quarter-point to one per cent. It was the third 25-basis-point increase since June 1. The central bank said any further hikes would be "carefully considered in light of the unusual uncertainty surrounding the (economic) outlook."
Major Canadian commercial banks raised their prime lending rates following the central bank's decision.
The Canadian dollar rose 97 basis points to US96.39¢ on Wednesday.
The Ivey purchasing managers index, a key measure of business activity in Canada, came in at 65.9 for August, up from 54 in July and better than the reading of about 55 most economists were expecting.
The junior TSX Venture composite was down 6.76 points, or 0.42%, to 1,588.20 on Wednesday. On U.S. stock markets, the Dow Jones industrial average was up 46.32 points, or 0.45%, to 10,387.01. The Nasdaq composite index rose 19.98 points, or 0.90%, to 2,228.87. The Federal Reserve said in its periodic Beige Book Wednesday that the U.S. economy continued to expand over the summer, but at a slower pace.
"We've been relatively slightly stronger (on Canadian stock markets than in the U.S.)," said Davis, suggesting a good part of the TSX decline was a result of profit-taking.
