TSX falls the most in seven weeks as commodities fall


A sign displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch

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  • The TSX ends down 281.05 points, or 1.3%, at 21,180.78
  • Energy drops by 4.5%; oil settles 5.8% lower
  • The materials group lost 3.1%
  • Technology ends 2% lower

TORONTO, March 14 (Reuters) – Canada’s main stock index fell more than 1% on Monday as tentative signs of progress in Russian-Ukrainian peace talks weighed on shares of energy and materials companies .

The Toronto Stock Exchange’s S&P/TSX Composite Index (.GSPTSE) ended down 281.05 points, or 1.3%, at 21,180.78, its lowest closing level in nearly two weeks and its biggest drop since Jan. 21.

“It’s no surprise that we had a down day in Canada given the massive sell-off in commodity markets,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

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U.S. crude oil futures fell 5.8% to $103.01 a barrel on hopes of progress towards a diplomatic end to Russia’s invasion of Ukraine – a development that would boost supply world – while a pandemic-related travel ban in China casts doubt on demand. Read more

The Toronto market’s energy group fell 4.5%, while the materials group, which includes precious and base metal mining companies and fertilizer companies, lost 3.1%.

Copper fell 2.5% and gold 1.7% to around $1,951 an ounce.

Investors embraced Canada’s commodity-linked stock market to shield their portfolios from the impact of supply shortages and soaring inflation as energy and materials groups hit multi-year highs the last days. Read more

“It’s not unusual in a bull market to have these big sell-offs once in a while,” Cieszynski said. “The question now is whether there is a follow-up and where are we at.”

Tech stocks were also a drag, falling 2% as bond yields climbed ahead of the Federal Reserve’s expected start of an interest rate hike cycle on Wednesday.

Higher interest rates reduce the value to investors of future cash flows that companies in technology and other high-growth sectors are expected to generate.

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Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru, editing by William Maclean

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