TSX Drops For 4th Consecutive Week

The S&P/TSX Composite Index fell 1.7% to 31,317 on Friday as the Canadian benchmark tracked its fourth straight weekly loss amid escalating Middle East conflict and surging energy costs. Materials stocks were primary laggards following a drop in gold prices with Agnico Eagle, Barrick Gold, Wheaton Precious Metals and Franco-Nevada plunging between 2% and 5.6%. Financial heavyweights faced broad selling as TD Bank and Bank of Montreal dropped around 2% despite the Bank of Canada holding interest rates steady at 2.25% on March 18th. Energy producers provided a minor cushion with Suncor Energy and Cenovus Energy posting modest gains as global crude prices spiked. These developments followed a busy week where traders monitored reports of force majeure in Iraqi oilfields and potential US military deployments to the region. The index has now retreated over 7% in March as geopolitical volatility continues to pressure global equity markets.

The S&P/TSX Composite Index fell around 0.3% to below the 31,800 mark on Friday, setting the index on track for a third straight weekly loss of nearly 2.5%, as investors monitored escalating Middle East tensions. Materials stocks were the primary laggards following a sharp drop in gold prices with Agnico Eagle Mines, Barrick Gold, and Wheaton Precious Metals plunging around 6%. Financial heavyweights remained under pressure as Royal Bank of Canada and the Bank of Nova Scotia fell over 1% despite earlier stability from the Bank of Canada holding rates steady at 2.25% on March 18th. Energy producers provided a partial cushion as Cenovus Energy surged nearly 4% and Canadian Natural Resources rose over 1% amid ongoing geopolitical tensions in the Middle East. These developments followed recent data showing retail sales rose 1.5% in January and a 5.4% advance in the PPI while traders monitored diplomatic signals from US and Israeli leadership regarding the vital Strait of Hormuz.

Futures tracking the S&P/TSX Composite Index declined Friday, putting the index on track for a third straight weekly loss, on continued worries of stagflation amid soaring energy prices. The surge in oil prices drove a gauge tracking Canadian energy equities to surge more than 38% this year, but generated concerns of inflation that pressured the outlook for financial services providers. Yesterday, the Bank of Canada held interest rates steady but warned it stands ready to raise them if inflation pressures return, keeping banking stocks under pressure. A hawkish outlook for the central bank was further supported by data released before the open, with both retail sales and producer prices rising sharply.