TSX falls to six-week low on global growth jitters

Toronto Stock Exchange's S&P/TSX composite index rises to a record high

By Fergal Smith

(Reuters) - Canada's main stock index fell to a near six-week low on Tuesday as worries about the global economic outlook weighed on metal mining shares and investors braced for a potentially hawkish message this week from the Federal Reserve.

The Toronto Stock Exchange's S&P/TSX Composite index ended down 182.42 points, or 0.8%, at 21,887.34, its lowest closing level since May 2.

"We are seeing slower economic growth globally and I think that's what's weighing not only on markets in general but commodities a little bit more specifically, and with expectations easing, I think that's contributing to the volatility," said Philip Petursson, chief investment strategist at IG Wealth Management.

The World Bank said the U.S. economy's stronger-than-expected performance has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026.

The materials index, which includes base and precious metal miners as well as fertilizer companies, was down 1.5% as copper prices fell on weak indicators from top metals consumer China.

The Federal Reserve is likely to leave interest rates unchanged on Wednesday but will release its updated economic projections and "dot plot," which shows where policymakers expect interest rates to stand this year and longer term.

"It's the tone of the message that people will be paying attention to, whether it comes in hawkish or dovish, and I think the hawks are leading the day," Petursson said.

Heavily weighted financials also lost ground, falling 1.1%, and the utilities group, which could particularly benefit from lower borrowing costs, ended 1% lower.

Shares of Advantage Energy Ltd fell 6.1% after the company announced a strategic asset acquisition and concurrent financing.

Enghouse Systems was a bright spot. Its shares climbed 4.7% after the software firm posted second-quarter results.

(Reporting by Fergal Smith in Toronto and Sruthi Shankar in Bengaluru; Editing by Shreya Biswas and Lisa Shumaker)