Mining & Metals
TSX Closer: A Lower Close Amid Uncertainty Over Peace Talks; Rosenberg Research On Canadian Banks
The Toronto Stock Exchange was back in negative territory Thursday with both the Base Metals and Energy sectors lower, and amid reports Iran is still reviewing a peace proposal put forward by the United States, while the two nations wrestle over talks to end the war.The S&P/TSX Composite Index closed down 125.2 points to 33,856.62, as Base Metals, down 1.7%, and Energy, down 1.4%, led decliners. In contrast, the Battery Metals Index led gainers, rising 7.8%.Reflecting the overall negative tone to the market, the Financial sector lost 0.4% even as Rosenberg Research published a note entitled 'Canadian Banks: Quality at a Premium Price' in which it said secular market themes continue to support Canadian banks' premium valuations, as the sector benefits from rising global interest in non-U.S.-dollar, commodity-based economies.Key takeaways from the note written by Mehmet Beceren, Senior Markets Strategist at Rosenberg, include the idea that Canadian banks are benefiting from more than bank fundamentals. As heavyweights in the Canadian equity index, the Big Six are getting a side benefit from global flows into Canada as investors seek exposure to hard assets, commodities, oil, gold, and non-U.S.-dollar markets, Beceren said.Another takeaway is that the quality premium is defensible. "Valuations are not cheap relative to history, but high profitability and supportive thematic tailwinds justify higher multiples in a market that continues to re-rate quality earnings," Beceren added.Of commodities, West Texas Intermediate crude oil fell for a third-straight session, but rose off the day's low on uncertain prospects for a potential peace deal between the United States and Iran. WTI crude oil for June delivery closed down $0.27 to settle at US$94.81 per barrel, after earlier touching US$89.85. July Brent oil was down $0.67 to US$100.60Gold had risen for a third-straight session by midafternoon Thursday on optimism a deal to end the war on Iran may be near, cutting into oil prices and pushing the dollar lower amid easing fears the supply shock around the war would boost inflation and force higher interest rates. Gold for June delivery was up $20.60 to US$4,714.00 per ounce, after rising by US$125,80 on Wednesday.
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