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TSX falls 1% as recession risk pressures commodity markets

07/05/2022 | 05:00pm EDT

(New throughout, udpates prices, market activity and comments to close)

* TSX ends down 194.70 points, or 1%, at 18,834.16

* Touches its lowest intraday level since March 2021

* Energy sector tumbles 6.8%; oil settles 8.2% lower

* Materials group loses 4.4%

TORONTO, July 5 (Reuters) - Canada's main stock index fell on Tuesday, caught up in broader financial market volatility as global recession worries came to the fore, with energy stocks diving along with oil prices.

The Toronto Stock Exchange's S&P/TSX composite index ended down 194.70 points, or 1%, at 18,834.16, after touching its lowest intraday level since March 2021 at 18,520.38.

Overall, the global mood was downbeat with investors selling stocks, commodities and emerging markets assets while seeking safety in government bonds as surging European gas prices fueled worries about a further upswing in inflation and aggressive central bank actions to tame it.

"The risk is that inflation expectations are rising fast and driving second-round inflationary effects that will require central banks to tighten even more than they or the market currently conceives," analysts at Saxo Bank wrote in a note.

Energy stocks tumbled 6.8%, tracking sharp losses in crude prices on growing fears of a global recession and lockdowns in China that could slash demand.

U.S. crude oil futures settled 8.2% lower at $99.50 a barrel.

The materials sector, which includes precious and base metals miners and fertilizer companies, declined 4.4% as gold and copper prices tumbled.

Together, energy and materials account for 30% of the TSX's market capitalization.

Heavily-weighted financials were also a drag, ending 0.4% lower.

In contrast, the technology group advanced 3.6%, helped by a gain of 9.9% for shares of e-commerce giant Shopify Inc as bond yields fell. (Reporting by Fergal Smith; Additional reporting by Sruthi Shankar in Bengaluru; Editing by David Gregorio)

© Reuters 2022
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