Precious Metals Sell-Off Triggers Sharp Toronto Stock Exchange Drop
Canada’s primary stock market, the S&P/TSX composite index, experienced a significant decline on Friday, dropping nearly 1,000 points. This drop was largely attributed to a sell-off in precious metals, triggered by the potential nomination of Kevin Warsh as the next chair of the U.S. Federal Reserve.
Sharp Decline in Toronto Stock Exchange
The S&P/TSX composite index saw a plunge of 992.37 points, settling at 32,023.76. Precious metal prices also fell sharply, with the April gold contract decreasing by US$348.80 to US$5,006.00 per ounce. Despite this setback, gold prices have still surged over 70 percent in the past year.
Impact of U.S. Federal Reserve Nomination
Market analysts, including Allan Small from iA Private Wealth, noted that the announcement of Kevin Warsh as a potential Fed chair had significant implications. Warsh is perceived as more hawkish compared to other candidates, which likely strengthened the U.S. dollar and contributed to the retreat in metal prices.
- Current S&P/TSX composite index: 32,023.76
- Point drop: 992.37 points
- April gold contract price: US$5,006.00 an ounce
- Past year gold price increase: Over 70%
Small highlighted that this decline appears largely driven by fears over a loss of the Federal Reserve’s independence, which could alter how monetary policy impacts economic stability.
U.S. Market Influences
In the U.S., major indices also faced losses. The Dow Jones Industrial Average dropped by 529.07 points, bringing it down to 48,542.49. The S&P 500 index fell 55.96 points to 6,913.05, while the Nasdaq composite slipped 225.71 points to 23,459.41. A key factor contributing to this sell-off was disappointing earnings from large technology firms, particularly Microsoft, which reported a 10 percent decline in its stock value after its earnings announcement.
Currency and Commodities Update
Meanwhile, the Canadian dollar traded at 73.69 cents U.S., down from 73.99 cents U.S. the previous day. In commodity markets, the March crude oil contract saw a slight increase of 26 cents, reaching US$65.68 per barrel.
