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TSX slips as oil stocks drag, inflation data in focus

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Toronto’s main stock index slipped on Monday as tumbling oil prices weighed on energy stocks, while investors awaited domestic inflation data and interest rate decisions from major central banks this week.

The Toronto Stock Exchange’s S&P/TSX composite index was down 0.21% at 19,344.22, its lowest since Sept. 8, falling along with Wall Street indexes ahead of a Federal Reserve monetary policy decision on Wednesday.

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Investors will be focusing on Canadian consumer prices and retail sales data later this week for clues on how much further the Bank of Canada will tighten its monetary policy.

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The central bank hiked rates to 3.25% from 2.50% earlier this month to the highest level in 14 years, and is expected to raise them by 50 basis points next week.

“The markets reacted negative to U.S. CPI so hopefully that de-risks the potential volatility from the Canadian release,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.

“We are looking at interest rate expectations which have moved higher, so we don’t expect it to be much of a negative catalyst for the markets given what transpired last week.”

Canada’s energy sector dropped 1.8%, dragging the resource-heavy TSX index lower, as oil prices slid about 2%, pressured by expectations of weaker global demand and U.S. dollar strength.

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Global stock markets came under heavy selling pressure last week after hotter-than-expected U.S. inflation data and a profit warning from global delivery company FedEx dented risk appetite.

Data earlier showed domestic producer prices fell by 1.2% in August from July on lower prices for energy and petroleum products.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.3%, with gold miner Kinross Gold Corp gaining 7.1% after announcing a $300-million share buyback plan. (Reporting by Sruthi Shankar and Shashwat Chauhan in Bengaluru; Editing by Vinay Dwivedi)

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