TSX lower on U.S. rate hike worries

North American stock markets closed sharply lower Monday as investors south of the border mulled the increased odds of a Federal Reserve rate hike following last week’s strong U.S. jobs data.

The Toronto Stock Exchange’s S&P/TSX index gave back 70.68 points at13,482.62, while the Canadian dollar was at 75.33 cents (U.S.), up 0.12 of a cent from Friday’s close.

In New York, the Dow Jones average of 30 stocks was down 179.85 points at 17,730.48, the broader S&P 500 index declined 20.62 points to 2,078.58 and the Nasdaq lost 51.82 points to 5,095.30.

That followed Friday’s better-thanexpected employment report, which showed the U.S. economy added 271,000 jobs in October and left many investors expecting a December interest-rate hike from the Fed.

Norman Raschkowan, senior partner at Sage Road Advisers, said given the lack of news, investors may be acting on general concerns about lagging global economic growth.

“In the U.S., people are taking some profits today after what’s been a pretty good few weeks, and that’s just setting a negative tone for the other major markets,” Raschkowan said.

Meanwhile, earnings results from Canadian companies have been lacklustre thus far, Raschkowan said.

“There haven’t been a lot of companies that you could really say, ‘Wow, those are great results,’ ” Raschkowan said. “They’ve either been OK or actually disappointing.”

One bright spot on Monday was the gold sector of the TSX, which climbed nearly 3 per cent following a small increase in the price of the precious metal.

After hitting a three-month low on Friday, the December gold contract rose $0.40 to $1,088.10 an ounce on Monday, a move that Raschkowan said likely relates to the slight decline in the value of the U.S. dollar.

“The price of gold is usually denominated in U.S. dollars, but people view it as a more stable store of value,” Raschkowan said.

“So if the dollar has gone down in value, the gold should still be worth the same, so in terms of the number of dollars, it should go up. They just tend to move inversely with each other over long periods of time — not usually on a day-to-day basis, but over longer periods there’s definitely a relationship there.”

Meanwhile, the December crude contract fell 42 cents to $43.87 a barrel, the December contract for natural gas was down seven cents at $2.30 per mmBtu and copper rose a penny to $2.23 a pound.

Shares of Quebec-based Valeant Pharmaceuticals International climbed 3.7 per cent, or $4.05, to $113.24 as the embattled drugmaker announced it will provide an operational update Tuesday. Valeant has been entangled in a drug-pricing controversy, and company officials are scheduled to appear at a U.S. Senate committee hearing that is examining the issue