The S&P/TSX Composite Index closed sharply lower on Tuesday as weakness in base metals and other sectors outweighed gains in energy and health-care stocks.
The index closed down 299.99 points, or 0.8%, at 36,367.93, with most sectors ending in red. Health Care led gainers, up 1.6%, while Energy was up 1.2%. Base Metals and Information Technology led decliners, down 2.3% and 2.2%, respectively.
In commodities, both West Texas Intermediate (WTI) and Brent crude rose on Tuesday, extending their recent gains as fading hopes for a US-Iran peace agreement heightened concerns over continuing disruptions to Middle East oil supplies. Continued uncertainty surrounding shipping through the Strait of Hormuz kept supply risks in focus, supporting both crude benchmarks.
September WTI crude oil contract closed up $0.44, or 0.5%, to settle at $84.94 per barrel, while October Brent oil was last seen up $0.21, or 0.2%, at $91.08 per barrel.
Meanwhile, December Comex gold futures shredded 1.6%, or $73.40, to $4,400.30 per ounce at last look.
In currencies, the US dollar edged higher 0.2% against the Canadian dollar, with USD/CAD at 1.3900 at last look.
Commerzbank Research said the Canadian dollar remains one of the weakest-performing G10 currencies despite signs of improvement in the domestic economy. The Canadian dollar initially benefited from higher oil prices, but subsequent declines in energy prices and changing interest-rate expectations have weighed on the currency, the bank said in a note on Tuesday.
In real estate, Canada's housing construction activity slowed in July, with the seasonally adjusted annual rate of housing starts declining 5% monthly to 229,074 units, down from 240,773 units in June, according to the Canada Mortgage and Housing Corporation on Tuesday. July's drop was unexpected, as a Bloomberg survey predicted a housing starts rise to 250,000.
The slowdown is expected to persist as homebuilders contend with slower population growth, elevated unsold inventories, rising rental vacancy rates and earlier weakness in pre-construction sales, said TD Economics after the release of CMHC data.
Meanwhile, international demand for Canadian bonds surged to a record pace in June, with non-residents purchasing C$185 billion worth of Canadian bonds year to date, which is more than 50% above the previous record pace, according to National Bank of Canada Capital Markets.
Non-residents account for 45% of the domestic Government of Canada bond market, compared with 42.9% held by Canadian investors.