Canada's resource-heavy benchmark stock index fell on Monday, pressured by a drop in gold and crude oil prices, while investors assessed domestic and U.S. economic data to gauge the Federal Reserve's monetary policy path.
The Toronto Stock Exchange's S&P/TSX Composite index TSX:TSX fell 0.18% to 35,212.32 points.
The materials TSX:TTMT and global gold (.SPTTGD) indexes fell 2.2% and 1.7%, respectively, as bullion prices retreated . Stocks of Canadian miners I-80 Gold TSX:IAU fell 7%, while those of Eldorado Gold TSX:ELD and Endeavour Silver TSX:EDR were down 2.7% and 3.5%.
Canada's energy index TSX:TTEN dipped 1.2%, tracking a fall in crude prices ICEEUR:BRN1!, NYMEX:CL1! earlier in the day, after OPEC+ agreed to further raise output targets from August even as exports through the Strait of Hormuz continued to recover, increasing prospects of elevated global supplies.
"With inflation being high, a little bit of market volatility, and with a lot of geopolitical conflict, you would say that sets up for a pretty good market for gold, and that just hasn't been the case so far," said Josh Sheluk, CIO and portfolio manager at Verecan Capital Management.
"And all of a sudden, we're talking about a potential glut (in the oil market). It just goes to show how unpredictable, especially commodity markets, are over short-term timeframes," Sheluk said.
An S&P Global survey showed that Canada's services economy contracted in June as geopolitical uncertainty and elevated prices hurt demand. However, the recent slide in crude prices has raised expectations of the economy returning to growth.
Last week, the S&P/TSX Composite index hovered near a record high, supported by easing tensions in the Middle East and fading Fed rate-hike expectations following a soft U.S. labor market report.
Traders are currently pricing in just one U.S. rate hike by the end of this year, according to LSEG data, while the Bank of Canada is expected to keep interest rates steady this year, with its next policy decision due on July 15.