Canadian shares headed lower on Tuesday, bucking the uptrend in global markets as falling metal and oil prices weighed on the benchmark index.
The S&P/TSX Composite Index was down 0.2 per cent to 16,3334.76 points as of 11.31 a.m. eastern time.
Miners were among the biggest decliners as material stocks fell the most since October in early trading.
A stronger U.S. dollar, which is the currency that used to price commodities, and supply issues in China with stockpiles of metals such as iron ore were putting pressure on metal prices, according to analysts.
“Everything this year (in commodity markets) has been largely about the dollar,” said Credit Agricole foreign exchange strategist Manuel Oliveri.
Shares of Teck Resources were down almost nearly 4 per cent, while Kinross Gold Corp. fell over 6 per cent in the morning.
On U.S. markets, the Dow Jones Industrial Average climbed past the 26,000 point mark for the first time, boosted by technology, healthcare and financial stocks.
Oil falls from high
Canadian energy shares felt the pinch after oil prices, which were at three-year highs, fell for the first time in six days.
Analysts said oil’s pullback on Tuesday after several days of gains was largely due to investors embarking on profit- taking.
Benchmark U.S. crude fell to $64.13 US per barrel in New York.
Shares of heavyweights such as Cenovus Energy were down almost 2 per cent, while Encana Corp. fell nearly 3 per cent.
Loonie higher ahead of rate decision
The Canadian dollar, meanwhile, was trading higher against its U.S. counterpart a day before the Bank of Canada’s decision on interest rates.
The loonie was at 80.60 cents US, up from Monday’s average of 80.50 cents US.
While markets are pointing to the likelihood of a rate hike by the Bank of Canada on Wednesday, Shaun Osborne, chief foreign exchange strategist at Scotiabank said a “hawkish hold” may be a more likely alternative at this point.
“A more cautious approach to the immediate policy outlook is reflected in a range of factors — NAFTA risks remain significant, the immediate data run beyond the jobs numbers has been a little less impressive, the idea that the Bank of Canada “can’t disappoint” market expectations is dispelled by the September rate hike,” he said.
If the bank did decide on a “hawkish hold” on interest rates tomorrow, Osborne thinks weakness in the Canadian dollar would be limited before selling of the U.S. dollar re-emerges.
Elsewhere, bitcoin’s plunge overnight on fears of a regulatory crackdown in South Korea saw most cryptocurrencies post double digit losses.