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CANADA STOCKS-TSX posts steepest daily decline since June as gold slides

By Reuters News

By Fergal Smith

TORONTO, Oct 30 (Reuters) - Canada's main stock index fell by the most in nearly six months on Friday as gold fell and investors weighed the potential impact of a pullback in AI spending on earnings growth, with technology and metal mining shares leading the declines.

The S&P/TSX Composite Index .GSPTSE ended down 629 points, or 1.74%, at 35,620.03, its steepest decline since June 5 and the lowest closing level since October 14. For the month, the index was up 1.09% after falling 2.85% in September.

  • US stocks also tumbled following disappointing quarterly results from Intel and Amazon, which amplified growing fears surrounding AI-related companies' massive spending on the nascent technology.

  • "The market had been up pretty well this year on the back of earnings growth and now we're generally starting to question earnings growth as we're starting to see some scale back to the AI spend," said Greg Taylor, chief investment officer at PenderFund Capital Management. "That's starting to cause everyone to reset just their expectations of what's going to happen going forward."

  • The technology sector .SPTTTK fell 3%, with shares of e-commerce company Shopify SHOP.TO down XX6.2%.

  • The materials sector .GSPTTMT, which includes metal miners, was down 4.8% as the price of gold fell 3.5%, hitting a one-year low.

  • Heavily weighted financials .SPTTFS shed 1.6% and industrials .GSPTTIN ended 1.2% lower.

  • Shares of TFI International tumbled 17.2% after the transportation and logistics company's quarterly results missed estimates.

  • Domestic data was downbeat, showing that Canada's economy stalled for a second straight month in August.

  • Still, investors expect the Bank of Canada to raise interest rates further by January after the central bank tightened on Wednesday for the first time in three years.

  • Just two of the 10 major sector ended higher, including energy .SPTTEN. It rose 1.7% as US crude oil futures settled 2.1% higher at $104.12 a barrel on the potential for escalation in the Iran war after the US midterm elections.

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