TSX drops as weak oil prices hit energy shares

Fri Aug 7, 2015 5:16pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Canada's main stock index fell on Friday in a broad retreat led by heavyweight energy and financial stocks as oil prices recorded their sixth straight weekly loss and North American jobs data highlighted Canada's relatively limp economy.

Canadian employment data showed a small gain in June, but a loss of full-time positions, while U.S. numbers were close enough to forecast to stoke bets the Federal Reserve will raise interest rates, perhaps as early as September.

"The probability of the Fed raising rates is getting higher," said Marcus Xu, portfolio manager at M.Y. Capital Management. "But the market could go lower from here."

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE fell 103.21 points, or 0.72 percent, to 14,302.70.

Nine of the index's 10 main groups fell, and decliners outnumbered advancers by almost 3-to-1. The index lost 1.1 percent over the holiday-shortened week.

"There's definitely more downside risk," Xu said. "Being more cautious and staying away from high-yield sectors is a good idea."

The most influential weights included pipeline operators TransCanada Corp (TRP.TO: Quote) and Enbridge Inc (ENB.TO: Quote) as well as oil producers such as Cenovus Energy Inc (CVE.TO: Quote) as crude prices were haunted by sluggish demand and elevated supply. [O/R]

TransCanada fell 1.9 percent to C$48.37, Enbridge lost 1.1 percent to C$55.89, and Cenovus shed 2.5 percent to C$55.89. The overall energy group fell 1.9 percent.   Continued...

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