Despite a downward trend in Canada’s commodity-weighted stock exchanges in recent months, Scotiabank’s commodity price index reported only a “modest” decline in May.
The bank’s monthly price index declined 2.6% in May compared with the month before.
The decline was “much smaller” than would have been anticipated given the recent pullback in commodity prices, said Patricia Mohr, vice-president, economics and commodity market specialists at Scotiabank.
“Over one-third of the commodities included in the Scotiabank commodity price index, such as coking coal and potash, are not traded on exchanges – insulating them to some extent from day-to-day jitters over economic and financial market developments such as mild growth slowdown in China,” Mohr said.
“As such, the index is likely a truer reflection of where aggregate commodity prices actually stand … than indices based only on futures-determined prices.”
Although the Toronto Stock Exchange was up 119 basis points Tuesday morning to 13,086, the benchmark index has lost approximately 8% of its strength since a March 7 52-week high of 14,329.
Similarly, the TSX Venture Exchange, which is heavily weighted with Vancouver-based mining companies, has seen a 24% decline since March 7.
Despite the drop, Scotiabank’s metal and mineral index was down only 2.3% in May compared with April.
The bank said moderately lower base metals, molybdenum, uranium and silver prices offset stronger gold, potash and cobalt prices.
Joel McKay
Twitter: jmckaybiv