Canadian equities turned negative on Thursday after rising for four consecutive sessions, as slightly hotter-than-expected U.S. consumer inflation numbers spooked investors by reigniting fears of more interest rate hikes. A decline in commodity prices, especially natural gas and metals, also added pessimism, driving the S&P/TSX Composite Index down by 164 points, or 0.8%, yesterday to 19,500.
Even as an intraday spike in crude oil prices helped the energy stocks end the session with optimism, all other key TSX sectors remained in the red, with utility, consumer cyclicals, and mining stocks leading the market selloff.
In its latest consumer price index report, the U.S. Bureau of Labour Statistics highlighted recent increases in shelter costs and gasoline prices as two major contributors to September’s high inflation.
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Shares of K92 Mining (TSX:KNT) dived by 12.5% to $4.83 per share after the Vancouver-headquartered metals miner released its third-quarter production report. The company revealed a safety incident that occurred on June 28, which led to the suspension of underground mining for nine days, affecting its quarterly production.
While the company expects its fourth-quarter production to be the strongest for the year, it trimmed its full-year 2023 production guidance after facing operational challenges in the first three quarters. On a year-to-date basis, KNT stock is now down 37%.
Sliding metals prices also drove Torex Gold, Ero Copper, NovaGold Resources, and Capstone Copper lower by more than 6% each, making them among yesterday’s worst performers on the Toronto Stock Exchange.
Spin Master (TSX:TOY) rallied for a second session in a row, extending its two-day gains to more than 10%. This rally in TOY stock started on Wednesday after the Toronto-based firm announced its intentions to acquire the American toy manufacturer Melissa & Doug in a cash deal worth US$950 million.
With the proposed acquisition deal, which is expected to close in the first quarter of 2024, Spin Master aims to improve its positioning in the children’s entertainment industry. Year to date, TOY stock is not up 11.6%.
The exchange’s daily volume data shows that Canadian Natural Resources, Enbridge, Toronto-Dominion Bank, and Royal Bank of Canada were the most active stocks yesterday.
TSX today
West Texas Intermediate crude oil futures prices surged more than 3% early Friday morning, a day after the U.S. Treasury Department imposed sanctions on two shipping companies for violating price cap rules while carrying Russian crude oil. At the same time, gold and silver prices were also trading on a firm note, which could lift the commodity-heavy main TSX index at the open today.
While no major economic or corporate releases are due today, stocks may remain volatile, as investors continue to assess the U.S. consumer inflation report and the Fed’s meeting minutes that came out earlier this week. Nonetheless, the TSX Composite seems on track to snap three-week losing streaks as it currently trades with 1.3% week-to-date gains.
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