TSX takes a 'breather' as commodities fall, snap election called

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index edged lower on Monday as sliding commodity prices weighed on resource shares and after Prime Minister Justin Trudeau called an early election, but the index stayed in reach of a record high.

The Toronto Stock Exchange's S&P/TSX composite index closed down 34.65 points, or 0.2%, at 20,483.42. On Friday, it touched a record intraday high of 20,567.11.

"The TSX has had such a phenomenal run ... this is just taking a breather," said Lorne Steinberg, president of Lorne Steinberg Wealth Management Inc. "We still feel there is a good long way to run in Canada. The market is not expensive."

Since the start of the year, the TSX has advanced 17.5%, supported by soaring earnings growth.

The energy group retreated 2.3% on Monday, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 0.9%.

Oil settled 1.7% lower at $67.29 a barrel and copper was down 1.6%, pressured by weak Chinese economic data.

"Those large trading partners (with Canada), they're starting to slow," said Bryden Teich, a portfolio manager at Avenue Investment Management.

"Canada is so tied to the commodities cycle that if that sort of stalls out, the more cyclical parts of the markets in Canada can get hurt."

Uncertainty around the election could also be a headwind for the market, according to some investors.

Trudeau on Sunday called an early election for Sept. 20, saying he needed a new mandate to ensure voters approved of his Liberal government's plan to recover from the COVID-19 pandemic.

Mortgage lender Home Capital Group Inc climbed 5.7% to C$42.02, its highest close since July 2015, after a clutch of brokerages raised their price targets on the stock.

Weed producer OrganiGram Holdings Inc was the biggest decliner on the index, down 13.9%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)