Canada’s main stock index ended lower on Friday, adding to its monthly decline, as shares of First Quantum Minerals tumbled and Wall Street was unable to hang on to the gains it made after the release of cooler U.S. inflation data.
The S&P/TSX composite index ended down 66.37 points, or 0.3%, at 21,875.79.
For the month, the TSX was down 1.8% as investors shunned resource shares in favor of technology, while it posted a quarterly decline of 1.3%.
First Quantum Minerals Ltd shares fell 7.2% as Reuters reported the miner will launch formal arbitration proceedings against Panama in July over the country’s decision to close the Cobre Panama mine last November.
The materials group, which includes metal miners and fertilizer companies, lost 1.1%, while energy was down 0.2% as the price of oil settled 0.2% lower at $81.54 a barrel.
U.S. monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting interest rates later this year.
Bets on a rate cut in September rose to 66% after the personal consumption expenditures price index release, LSEG FedWatch data showed.
Traders have maintained bets on two cuts despite Fed projections of just one this year, as they hope inflation will keep cooling.
The Bank of Canada has already started its easing cycle but investors have become doubtful the central bank would cut again at its next policy decision on July 24 after the release of hotter-than-expected domestic inflation data on Tuesday.
Data on Friday showed Canada’s gross domestic product increased 0.3% in April, matching market expectations, while a preliminary estimate showed the economy expanded by a further 0.1% in May.
The first debate on Thursday between U.S. President Joe Biden and Republican rival Donald Trump also weighed on stocks, said Thomas Martin, senior portfolio manager at Globalt Investments, citing the incumbent’s shaky performance.
“People are trying to think about what’s going to happen with the presidential election. So instead of uncertainty decreasing after the debate, it’s increased,” he said.
Treasury yields reversed early losses to end higher, adding pressure on some megacap stocks.
San Francisco Fed President Mary Daly acknowledged the cooling inflation, and noted that it is “good news that policy is working.” Fed Governor Michelle Bowman said the central bank would follow its own path as its inflation goal has yet to be reached.
The S&P 500 energy and real estate were the top performers, up 0.42% and 0.62%, while utilities and communications services fell 1.08% and 1.63%, respectively.
Nike slumped 19.98% after forecasting a surprise drop in fiscal 2025 revenue, weighing on the broader consumer discretionary sector.
The Dow Jones Industrial Average fell 41.12 points, or 0.11%, to 39,122.94. The S&P 500 lost 22.57 points, or 0.41%, at 5,460.30 and the Nasdaq Composite dropped 126.08 points, or 0.71%, to 17,732.60.
Volume surged toward the closing bell when the FTSE Russell finalized the reconstitution of its indexes. It was the second biggest daily volume of the year.
The S&P 500 and the Nasdaq indexes registered quarterly gains of 3.9% and 8.3%, respectively. The Dow dropped 1.7%, highlighting the divergence between the more tech-heavy indexes and the rest of the market.
Advancing issues outnumbered decliners by a 1.29-to-1 ratio on the NYSE, which had 271 new highs and 75 new lows. The S&P 500 posted 16 new 52-week highs and one new low while the Nasdaq Composite recorded 58 new highs and 139 new lows.
Reuters, Globe staff