The TSX experienced a decline on Monday as tensions rise over poor Chinese economic performance and uncertainty regarding when the US Fed will be increasing rates.
The S&P/TSX composite index lost 49.85 points down to 14,976.92 – dropping below the 15,000-mark once again. The TSX is down four percent this month, with significant drops in the mining and energy industries.
The mining, energy, and financial sectors were the worst performing of the day.
Base metals miners were affected the most, with Sherritt falling by 2.8 percent, Teck Resources declining by 2 percent, and First Quantum Minerals dropping by 1.3 percent. The finance sector also took a hit, with Royal Bank declining 87 cents to $79.57.
The energy and mining industries are thought to have been affected by news of China’s 0.6 percent drop in industrial company profits last month, which suggests that growth in China will be slow. In addition, the pro-democracy protests in Hong Kong have raised concerns that business in China’s financial center may be disrupted.
Markets across the world have all been affected by the uncertainty of when the U.S. central bank will make its decision to increase rates (which have been at near zero since 2008).
However, markets have also been under pressure by concerns about Chinese growth and US rates for months, which begs the question, why has there been such high volatility in September?
Historically, September has had a record of being the worst month for trading in the year.
David Wolf, a portfolio manager in the Global Asset Allocation group at Fidelity Investments, told the Canadian Press:
“I don’t think a whole lot has really changed. We have been worried about China for some time from a longer-term point of view. But we have also generally been of the view that the government has the tools it needs to manage the excesses in the financial and property sectors. And on the Fed side, people tend to want to see things between the lines and conspiracy theories and little nudges and winks that for the most part really aren’t there.”
