TSX Falls as Higher Oil Prices and Bond Yields Fuel Inflation Concerns

Canada's main stock index, the S&P/TSX Composite Index, fell to its lowest in over a month on Thursday. The decline was driven by rising oil prices and higher bond yields, which fueled concerns about persistent inflation. Oil prices jumped 4% with West Texas Intermediate crude futures surging past US$100 a barrel for the first time since May 21.

The TSX Composite Index fell 309.67 points or 0.86% to 35,596.77, its lowest since August 4. The industrials sector was one of the few gainers on Thursday, but even this sector was under pressure from higher costs. Capstone Copper and Hudbay Minerals were among the biggest losers in the TSX Composite Index.

Higher bond yields also weighed on stocks, with two-year Treasury yields jumping to 4.516%, their highest since 2024. Traders now see a 69.8% chance that the Federal Reserve will hike interest rates by at least 25 basis points next week, up from about 64% before Thursday's report.

Investors are eagerly awaiting the U.S. consumer price index report due on Friday, which could provide more insight into inflationary pressures and potential rate hikes. In the meantime, stocks have come under pressure from elevated yields on risk-free U.S. Treasuries, making equities relatively less attractive.