A trader looks at screens while working on the floor of the New York Stock Exchange (NYSE) on March 27. (Lucas Jackson/Reuters)
Canada’s main stock index seesawed on Monday as lower oil prices weighed on the energy sector, offsetting gains for gold shares amid heightened demand for safe-haven assets like precious metals.
On global markets, U.S. President Donald Trump’s failure to win enough congressional support for medical insurance reform was bearish for stocks but bullish for government bonds, whose yields fell.
The financials group lost 0.3 per cent. Manulife Financial Corp. dropped nearly 2 per cent to $22.94, and Toronto-Dominion Bank declined 0.6 per cent to $64.81.
Higher bond yields would reduce the value of insurance companies’ liabilities and increase net interest margins of banks.
The energy group fell 0.8 per cent as oil prices declined on uncertainty over whether an Organization of the Petroleum Exporting Countries-led production cut will be extended beyond June in an effort to counter a glut of crude.
U.S. crude prices were down over 1.44 per cent, while Suncor Energy Inc. fell 0.8 per cent to $40.53.
At 11:24 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 0.14 per cent, or 21.09 points, to 15,463.76.
The TSX had ended last week with two straight days of gains after Canada’s government held off from raising taxes on investors in its budget, and the United States approved TransCanada Corp’s Keystone XL pipeline.
On Monday, four of the index’s 10 main groups were lower.
The materials group, which includes precious and base metals miners and fertilizer companies, added 0.8 per cent, with Barrick Gold Corp. climbing 1.4 per cent to $26.07.
Stocks, the dollar and U.S. long-dated Treasury yields slipped on Monday as investors fretted that U.S. President Donald Trump’s defeat over healthcare reform foreshadowed difficulties delivering other campaign promises, in particular fiscal stimulus.
Trump’s failure to rally enough support from his own Republican party – which controls both houses of U.S. Congress – to repeal and replace Obamacare spurred a rush to safe-haven assets such as gold, the Japanese yen and the Swiss franc.
MSCI’s all-country world equity index was down 0.16 as the fall in risk appetite dominated Asian and European stock markets.
The index was dragged down further after a lower open on Wall Street when main U.S. stock indexes hit their lowest levels in six weeks.
“The markets around the globe are falling as a rethinking of the ‘Trump Trade’ begins to focus on reality,” Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a note.
“While we don’t expect a full-blown correction to commence at this time, we do see rising negative sentiment replacing the ’Hope Trade.’”
The Dow Jones Industrial Average fell 66.4 points, or 0.32 per cent, to 20,530.32, the S&P 500 lost 5.56 points, or 0.24 per cent, to 2,338.42 and the Nasdaq Composite dropped 6.13 points, or 0.11 per cent, to 5,822.61.
European shares were hit by losses among miners and banks. Europe’s broad FTSEurofirst 300 index dropped 0.5 per cent at 1,477.12.
The U.S. dollar fell to its lowest since November against a basket of currencies as investors lost confidence in prospects for a U.S. fiscal spending boost under the Trump administration.
The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak. On Monday, the index slipped below 99.0, its lowest since Nov. 11, two days after the results of the presidential vote.
The weaker dollar helped boost gold. Spot gold was up 0.95 per cent at $1,255.70 an ounce, after hitting a 1-month high of $1,261.03 an ounce, earlier in the session.
U.S. long-dated Treasury yields fell to one-month lows on Monday, knocked by growing uncertainty about whether the Trump administration could deliver on its campaign promise to bolster the economy.
U.S. 30-year bond prices rose 15/32, yielding 2.976 per cent. Earlier, yields slid to 2.96 per cent, their lowest since Feb. 28.
“This is just follow-through from Friday. There is disappointment over the inability to pass the reform of Obamacare,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.
“There was also some concern over the time line over the tax reform,” he added.
Meanwhile, oil fell further towards $50 a barrel, pressured by uncertainty over whether an OPEC-led production cut will be extended beyond June in an effort to counter a glut of crude.
Brent crude was last down 14 cents, or 0.28 per cent, at $50.66 a barrel. U.S. crude was down 33 cents, or 0.69 percent, at $47.64 per barrel.