A pullback in gold and weaker oil dragged Canada's TSX lower, with the materials sector down 2.5%. Traders now price just one more Federal Reserve rate hike by year-end, while the Bank of Canada is widely expected to hold steady on July 15th.
A slide in gold and softer crude prices pulled Canada's TSX down, as the materials sector dropped 2.5% and resource stocks led the market lower. Gold's retreat mattered most, because the benchmark leans heavily on commodities and a down day in metals can outweigh otherwise supportive rate expectations.
When gold prices fall, miners' revenue tends to drop right away, but many costs — labor, energy, equipment, site overhead — do not fall nearly as fast, which squeezes expected profits. That leverage showed up sharply: a 2.3% gold slide turned into drops of 2.9% to 6.9% for I-80 Gold, Eldorado Gold, and Endeavour Silver. Oil's dip added pressure on energy stocks, reinforcing how much the index can hinge on a handful of resource sectors.
Rate expectations are shifting on both sides of the border. Traders are now pricing just one more Federal Reserve rate hike by year-end, according to LSEG. The Bank of Canada, meanwhile, is widely expected to keep rates steady at its July 15th decision, after softer signals from Canada's services economy.
The gold miners' outsized slide underscored the leverage baked into the sector: bullion's move is rarely the whole story for commodity producers.
Source: Finimize
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