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TSX falls for third straight week as U.S. dollar rebounds


By Fergal Smith

(Reuters) -Canada’s main stock index fell 1% on Friday as a jump in the U.S. dollar following the release of stronger-than-expected U.S. jobs data pressured metal mining stocks, while investors braced for increased volatility in the months ahead.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 222.10 points at 22,007.00. For the week, the index lost 1.2%, its third consecutive weekly decline.

The materials group, which includes metal miners and fertilizer companies was down 4.2% as the price of gold fell 3.7% and copper hit a one-month low.

“Gold is sensitive to the U.S. dollar and real interest rates,” said Joseph Abramson, co-chief investment officer at Northland Wealth Management.

The U.S. dollar and bond yields climbed after data showed the U.S. economy created 272,000 jobs in May, suggesting that the Federal Reserve could take time in starting its easing cycle.

The Toronto market has gained 5% this year, while the S&P 500, in the United States, has posted even larger gains.

“After big gains, we’re taking some profit because we expect risk aversion to increase until the U.S. election,” Abramson said.

President Joe Biden and former President Donald Trump will face each other in the U.S. presidential election on Nov. 5 in what looks set to be a divisive, closely fought contest.

Canada’s monthly employment report was also released. It showed the unemployment rate increasing to 6.2% in May and faster wage growth, providing mixed signals for the Bank of Canada.

On Wednesday, the BoC became the first G7 central bank to lower borrowing costs.

Energy also lost ground, falling 0.9%, as the price of oil gave back its earlier gains to settle 2 cents lower at $73.53 a barrel.

Real estate and utilities, two sectors particularly sensitive to bond yields, were down 1.6% and 1% respectively.

(Reporting by Fergal Smith in Toronto and Purvi Agarwal in Bengaluru; Editing by Ravi Prakash Kumar, Shreya Biswas and Cynthia Osterman)



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