CANADA STOCKS-TSX falls as metals weigh, oil rebound stokes inflation concerns

By Reuters News

By Darshan Kumar R

Sept 28 (Reuters) - Canada's benchmark index fell on Monday as a steep decline in metal prices weighed on mining stocks, while a rebound in crude revived inflation concerns, bolstering expectations that interest rates could stay higher for longer.

The Toronto Stock Exchange's S&P/TSX Composite Index .GSPTSE dropped 0.8% to 35,511.48 points by 10:14 a.m. ET.

  • The materials sector .GSPTTMT, which includes mining stocks, slid more than 3% as spot gold fell to a seven-week low on a stronger US dollar and rising US Treasury yields

  • Silver dropped 4.5% and copper hit a more than one-week low, adding further pressure GOL/

  • Miners Aris Mining ARIS.TO fell 6.3%, AbraSilver Resource ABRA.TO lost 5.6%, and NovaGold Resources NG.TO dropped 4.9%

  • Technology shares .SPTTTK also took a hit, down about 2%, as e-commerce giant Shopify SHOP.TO fell 3.3%

  • Brent crude futures rose nearly 2% to about $106 a barrel after US President Donald Trump rejected Iran's peace deal O/R

  • The rebound in oil prices renewed fears that energy-driven inflation could constrain central banks' ability to cut rates, pushing up bond yields and weighing on rate-sensitive sectors

  • "Canadian equities are caught between the benefit of higher oil prices and the drag from rising bond yields, while elevated rates remain a risk to the country's housing market and leave bank stocks looking overbought," said Matt Skipp, president at SW8 Asset Management

  • Investors will closely watch Canadian GDP data due Tuesday followed by US GDP and Personal Consumption Expenditures inflation data for insights on economic growth and clues on future monetary policy path

  • Meanwhile, Canadian drone services firm Draganfly DPRO.CD jumped 5.7% after the company said Unusual Machines >, which has Donald Trump Jr. on its advisory board, and an unnamed US investment fund each invested $5 million

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