CANADA STOCKS-TSX hits nearly two-month low as gold slides, bond yields climb

By Reuters News

By Darshan Kumar R and Fergal Smith

TORONTO, Sept 28 (Reuters) - Canada's main stock index fell to a nearly two-month low on Monday as the global bond market sell-off continued and after a steep decline in the price of gold weighed on mining stocks.

The Toronto Stock Exchange's S&P/TSX Composite Index .GSPTSE ended down 311.03 points, or 0.9%, at 35,489.86, its lowest closing level since July 31.

  • "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.

  • US Treasury yields rose and Canada's 10-year yield touched its highest level since October 2023 at 4.017%, as elevated oil prices fanned fears that inflation would stay higher for longer and prompt more Federal Reserve interest rate increases.

  • Canadian GDP data for July, due on Tuesday, could offer clues on the state of the domestic economy. Economists expect a flat reading compared to June.

  • The materials sector .GSPTTMT, which includes metal mining stocks, fell 3.7% as gold dropped 3.9% to a nearly eight-week low.

  • Heavily weighted financials .SPTTFS were also a drag, falling 0.7%.

  • U.S. crude oil futures settled up 0.2% at $92.60 a barrel, after easing off session highs on expectations that Qatari mediators would hold talks with the US and Iran to try to find a possible peace deal.

  • Energy .SPTTEN added 0.3%, while consumer discretionary was up 0.8% as Gildan Activewear GIL.TO clawed back some recent declines.

  • Donald Trump Jr.-backed Unusual Machines UMAC.A and an unnamed US asset management company have invested $10 million in Canadian drone services firm Draganfly DPRO.CD, boosting the company's shares.

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