Toronto stocks lower after Italian deficit reverberates through market

Ross Marowits, The Canadian Press
Published Friday, September 28, 2018 12:57AM EDT
Last Updated Friday, September 28, 2018 5:08PM EDT

TORONTO — Canada’s main stock index sustained its largest loss in more than a month while the loonie regained lost ground after the Canadian economy grew slightly faster than economists had expected in July.

The Canadian dollar traded at an average of 77.25 cents US compared with an average of 76.66 cents US on Thursday, boosting expectations that the Bank of Canada would raise its key interest rate next month.

The dollar’s performance was another positive read on the Canadian economy, said Ian Scott, an equity analyst at Manulife Asset Management.

“That against the U.S. dollar on a day where U.S. consumer spending data came in a bit weaker than expected I think kind of took some of the strength of the U.S. dollar and gave some strength to the Canadian dollar,” he said in an interview.

The Canadian economy grew by 0.2 per cent in July compared to a 0.1 per cent increase expected by economists. U.S. consumer spending edged up just 0.3 per cent in August, marking a slowdown from gains of 0.4 per cent in June and July.

The TSX closed down and gold rose as investors moved to safety after Italy’s new government announced a big increase in spending that would push its budget deficit much higher than planned by the previous government.

“I think it just kind of reverberated through the markets a bit today,” Scott said.

The S&P/TSX composite index closed down 131.48 points to 16,073.14, after hitting a low of 16,063.70 on 260.5 million shares traded.

U.S. markets were essentially flat. In New York, the Dow Jones industrial average gained 18.38 points to 26,458.31. The S&P 500 index was down 0.02 to 2,913.98, while the

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