TORONTO (Reuters) - Canada’s main stock index dipped on Thursday as lower commodity prices weighed on gold mining and energy stocks, while higher bond yields weighed on defensive sectors, such as utilities, telecoms and consumer staples.
Investors grappled with the implications of policy proposed by U.S. President-elect Donald Trump. He has promised to cut taxes and spend on infrastructure and has called for the repeal of the 2010 Dodd-Frank Financial Reform Act largely opposed by banks.
But bond yields have surged on the view that Trump’s economic policies would push up inflation.
“Higher interest rates are good for banks, but they are not good for a telco or utility because they have a lot of debt outstanding and they don’t offer much growth,” said John Stephenson, president and chief executive at Stephenson & Company Capital Management.
The utilities sector tumbled nearly 3 percent, while telecoms fell 1.8 percent and the consumer staples sector was down 2.8 percent.
Energy stocks fell 0.7 percent, pressured by lower oil prices.
U.S. crude oil futures settled 61 cents lower at $44.66 a barrel as markets focused on oversupply concerns, as well as whether OPEC will decide later this month to cut production. [O/R]
The materials group, which includes precious and base metals miners and fertilizer companies, lost 3.8 percent.
Barrick Gold Corp (ABX.TO) tumbled nearly 8 percent to C$21.22, while gold futures GCc1 fell 1.5 percent to $1,253.3 an ounce as the U.S. dollar rallied to a 3-1/2-month high against the yen.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE closed down 15.66 points, or 0.11 percent, at 14,744.25. Seven of the index’s 10 main groups ended lower.
Among the sectors that advanced was the heavyweight financials group, which rose 1.9 percent.
The country’s biggest life insurer, Manulife Financial Corp (MFC.TO), jumped 9.2 percent to C$21.94 after beating profit expectations driven in part by growth in its Asian business.
Its rival, Sun Life Financial, gained 9.8 percent to C$50.90 as it also beat expectations.
Canada’s major banks also rallied as investors bet that higher bond yields will lead to improvement in net interest margins.
The view that a Trump presidency will boost growth has led to investors repositioning in more cyclical stocks, Stephenson said.
Industrials rose 2.4 percent, including gains for railroad stocks.
Bombardier Inc (BBDb.TO) advanced 9.5 percent to C$1.96 after the plane and train maker reported a lower-than-expected adjusted net loss in the third quarter.
Additional reporting by Alastair Sharp; Editing by Jonathan Oatis