TSX posts biggest loss since February as global bond yields rise

Fri Sep 9, 2016 5:11pm EDT
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By Fergal Smith

TORONTO (Reuters) - Canada's main stock index suffered its biggest loss since February on Friday, slumping to a five-week low as higher bond yields in major economies pressured global stock and commodity markets.

Higher bond yields came after the European Central Bank on Thursday kept its policy stance unchanged and after comments by Federal Reserve officials that hinted at a U.S. interest rate hike, while the Bank of Japan is studying several options to steepen its yield curve.

The perception that major central banks are reluctant to use more monetary stimulus to depress bond yields has reduced liquidity in global markets and triggered higher volatility, said Matt Skipp, president of SW8 Asset Management.

North Korea conducted its fifth and biggest nuclear test on Friday, adding to risk aversion.

Global developments overshadowed stronger-than-expected domestic jobs data. Canada's economy added 26,200 jobs in August, recovering some of the positions lost in recent months.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 263.26 points, or 1.78 percent, at 14,540.00. All of the index's 10 major groups ended lower.

For the week, the index fell 1.7 percent.

U.S. crude oil futures settled $1.74 lower at $45.88 a barrel as traders noted that a tropical storm was behind this week's unexpected slump in U.S. crude inventories. [O/R]   Continued...

A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch