TSX posts longest losing streak since February last year

·2-min read
The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell for a sixth day on Thursday as investors eyed a transition to a slower growth phase of the economic cycle, reducing exposure to commodity-linked sectors such as energy.

The Toronto Stock Exchange's S&P/TSX composite index ended down 86.75 points, or 0.4%, at 20,215.36, its lowest close since July 27.

The index has ended lower each day since notching a record closing high on Aug. 11 of 20,565.37. It is the longest sequence of down days since February last year, before the coronavirus crisis began to impact Canada's economy.

The market is in "a mid-cycle type of correction," said Sid Mokhtari, a market technician at CIBC World Markets.

In mid-cycle, economies tend to grow at a more moderate pace after rapid activity coming out of recession.

We are seeing "how many of the commodity and cyclical types began to roll over as the U.S. dollar has begun gaining more strength relative to other currencies," Mokhtari said.

The U.S. dollar notched a nine-month peak, while oil dropped to its lowest since May, settling down 2.7% at $63.69 a barrel. The spread of the Delta variant of the coronavirus has weighed on the demand outlook for crude.

The energy sector retreated 1.9% to post its lowest closing level since February, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 1.8%. Combined, the sectors account for about 22% of the Toronto market.

"When it comes to commodity prices, it's hard to see oil prices move up substantially from here," said Philip Petursson, chief investment strategist at Manulife Investment Management.

Meanwhile, investors around the world retreated from riskier assets after minutes on Wednesday from the Federal Reserve's July meeting showed that policymakers were considering reducing pandemic-era support this year.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Sonya Hepinstall)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting