TORONTO (Reuters) - Canada’s main stock closed slightly lower on Tuesday, with a fall in financial and energy stocks partly offset by gains in the materials sector as precious metal prices jumped.
Bank shares fell as a risk aversion swept through global markets, with light volume boosting volatility, and energy shares slipped after oil touched its lowest point in more than five years.
Michael Sprung, president of Sprung Investment Management, said the drop in bank stocks was likely driven more by risk aversion than the weak oil market, but could also reflect the pressure lower oil prices put on the Canadian dollar. He said that could be a buying opportunity.
“The time to buy them is when the perception is that things are slowing down,” he said. “We’re seeing some of the multiples coming down in the banks, price-to-book ratios, and yet they’ve all got fairly healthy capital positions.”
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 23.88 points, or 0.2 percent, at 14,640.04.
Gold rose 2 percent on Tuesday while silver jumped more than 4 percent, as the U.S. dollar weakened and concerns over tension between Russia and the West helped push the metal through key chart levels. Gold stocks jumped 3.7 percent, lifting the broader materials sector. [GOL/]
U.S. crude CLc1 edged higher, but only after touching its lowest point since May 2009. Oil markets have been heavily oversupplied this year thanks to U.S. shale production and lower-than-expected consumption. [O/R]
Bryden Teich, an associate at Avenue Investment Management in Toronto, said the stocks hit hardest by recent oil price declines are those of companies that have announced spending cuts, and more announcements could be coming.
“There’s still a lot of fallout from prices at these levels, in terms of who’s going to be producing what,” he said.
The Bank of Nova Scotia (BNS.TO) played the biggest role in pulling the index lower, dropping 0.8 percent to C$66.39, while Royal Bank of Canada (RY.TO) fell 0.5 percent to C$80.43. Suncor Energy Inc (SU.TO) was also a drag on the index as it fell 0.8 percent to C$37.09.
Overall, the financial sector fell 0.6 percent while energy stocks dropped 1.0 percent.
Editing by Nick Zieminski and Chris Reese