TORONTO (Reuters) - Canada’s main stock index fell on Wednesday as a sharp drop in oil prices put pressure on energy shares, which slumped to an 11-month low, while investors weighed political uncertainty ahead of key events on Thursday.
U.S. crude CLc1 prices fell more than 5 percent to $45.75 a barrel after the U.S. government reported an unexpected increase in inventories of crude and gasoline. [O/R]
“It sheds light on the challenge that the oil markets are facing. OPEC can cut, but it is having very little impact on the overall price as the U.S. is offsetting production cuts out of the Middle East with production increases of its own,” Philip Petursson, chief investment strategist at Manulife, said in a telephone interview.
The overall energy group slumped to its lowest since June 27, down 3.4 percent.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.5 percent.
Gold prices fell from near seven-month highs on a stronger dollar and after prepared testimony by former FBI Director James Comey - released on Wednesday in advance of his Thursday appearance before a U.S. Senate committee - was seen as containing few surprises. But declines were limited as uncertainty from Thursday’s election in Britain remained.
If stocks decline on Comey’s testimony on Thursday, there could be a buying opportunity, Petursson said.
“When we look ahead into Q2 and Q3 earnings growth, they look very robust,” he added.
Telecommunication shares lost 1.4 percent. Still, the group has rallied more than 13 percent since mid-November.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 92.42 points, or 0.6 percent, at 15,372.14. Eight of the index's 10 main groups ended lower.
The financial services group was one of only two of the index's 10 main groups to end higher. It rose 0.3 percent, helped by a 3.6 percent gain for Sun Life Financial Inc SLF.TO to C$45.42 after RBC raised its rating on the stock to outperform from sector perform.
Canadian dollar-store operator Dollarama Inc DOL.TO reported a better-than-expected profit for the eighth straight quarter, as customers on average spent more at its stores, sending shares to an all-time high. Its shares rose 0.8 percent to C$129.02.
Reporting by Fergal Smith; editing by Grant McCool and Jonathan Oatis
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