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WRAPUP 2-Canadian stocks, dollar fall after snub from Norway's wealth fund

Fergal Smith
·2 min read

(Updates prices) * TSX falls 2.5% to its lowest close since April 24 * Toronto market's energy sector declines 5.6% * Canadian dollar dips 0.2% against the greenback * Canadian government bond yields trade mixed across flatter curve By Fergal Smith TORONTO, May 13 (Reuters) - Canada's main stock market index tumbled to a three-week low on Wednesday and the loonie fell against the U.S. dollar as hopes ebbed for a quick economic recovery from the coronavirus crisis and a major wealth fund blacklisted some Canadian oil companies. Norway's $1 trillion wealth fund, which operates under ethical guidelines set by that country's parliament, said it was excluding companies such as Canadian Natural Resources Ltd and Suncor Energy Inc for producing excessive greenhouse gas emissions. The focus on environmental, social and corporate governance (ESG) is "weighing on the energy space in Canada," said Ben Jang, portfolio manager at Nicola Wealth. The Toronto Stock Exchange's energy sector fell 5.6%, while the S&P/TSX composite index ended down 2.5% at 14,503.21, its lowest closing level since April 24. The decline for the index came as U.S. Federal Reserve Chairman Jerome Powell warned of an extended period of weak growth and stagnant incomes due to the coronavirus pandemic, pressuring U.S. stocks, which fell for a second straight day. Investors have also had to contend with worries that the premature lifting of lockdowns could lead to additional outbreaks of the virus Renewed U.S.-China trade tensions are also a worry. "The traditional thinking of buying the dip has become more and more in question," Jang said. Canada and the United States appear likely to extend a ban on non-essential travel until June 21 amid the novel coronavirus pandemic, sources in both nations said. The price of oil , one of Canada's major exports, settled 1.9% lower at $25.29 a barrel, while the Canadian dollar weakened 0.2% to 1.4101 to the greenback, or 70.92 U.S. cents. The loonie touched its weakest intraday level since last Thursday at 1.4113. The Bank of Canada is due to release on Thursday its annual financial system review, which will assess the main vulnerabilities of the Canadian financial system. Since March, the central bank has slashed interest rates to near zero and introduced for the first time a large-scale asset purchase program. Canadian government bond yields were mixed across a flatter curve on Wednesday, with the 2-year up 3.1 basis points at 0.306%. (Reporting by Fergal Smith; Editing by Nick Zieminski, Peter Cooney and David Gregorio)