04:23 PM EDT, 09/10/2024 (MT Newswires) -- The Toronto Stock Exchange closed with a loss on Tuesday as oil prices fell to the lowest in mor than three years while U.S. inflation data coming tomorrow should clear up any arguments over the size of an interest-rate cut coming next week from the Federal Reserve.

The S&P/TSX Composite Index closed down 24.06 point to closed at 23,003.09. Energy, down 2.3%, was the biggest decliner, followed by Telecoms, down 0.99%. The biggest gainer on the day was Battery Metals, up +1.4%.

The drop was dominated by oil issues, with the country's largest oil companies moving lower on the day and dominating the most-active issues list. West Texas Intermediate (WTI) crude oil fell to the lowest in more than three years on Tuesday as the market again focused on demand concerns as China's economy weakens, while two forecasting agencies cut their 2024 demand outlooks. WTI crude oil for October delivery closed down US$2.96 to settle at US$65.75 per barrel, the lowest since August, 2021. November Brent crude, the global benchmark, closed down US$2.65 to US$69.19.

A newly released ranking of the Toronto Stock Exchange's top performers shows investors continue to be attracted to companies at the forefront of the energy transition, The Canadian Press reported. The TSX300 is an annual list of the top-performing stocks on the exchange over a three-year period, based on dividend-adjusted share price performance. The 2024 edition of the list, released Tuesday is dominated by three sectors - oil and gas, industrial products and services, and mining. Together, these sectors account for 25 of the 30 companies on the list.

The top-ranked company this year is Hammond Power Solutions Inc. (HPS-A.TO), which builds custom transformers for alternative energy systems such as wind power and co-generation. The company has seen its dividend-adjusted share price soar 928% over the past three years.

In second place this year is Celestica Inc. ( CLS ) , which offers solutions for grid stability and EV infrastructure. The company saw a 706% increase in its dividend-adjusted share price, the report noted.

The U.S. consumer price index (CPI) for August will be released Wednesday morning, with the consensus estimate supplied by Marketwatch calling for inflation to fall to 2.6% annualized in August, down from 2.9% in July. The data is the last that will figure in next week's deliberations by the Federal Reserve's policy committee. While the market is mostly expecting a 25 basis point drop to rates next Wednesday, a downside surprise to inflation could convince the central bank to cut by 50 basis points.

Looking beyond Wednesday's US CPI data, Douglas Porter at BMO Economics said the recent steep drop in oil and related prices could "really hammer" September inflation. In recent days, he noted, wholesale gasoline prices have dropped below US$1.90/gallon, the lowest level since early 2021, when energy was still emerging from the pandemic depths. Porter said retail prices don't tend to swing quite as much as crude or wholesale costs. But the September CPI could report a annual drop of as much as 20% for gasoline, which weighs in at 3.5% of the basket. Alone, this would carve 0.7 ppts from the headline inflation rate.. "If sustained, the steep drop in energy costs could truly break inflation expectations," Porter noted.

However the prospect of global trade disruptions could make it difficult for the Bank of Canada (BoC) to consistently meet its 2% inflation target, BoC Governor Tiff Macklem said in a speech given to the Canada/U.K. Chamber of Commerce today in London, England.

"The rewiring of global trade will likely lead to more supply shocks in the future," said Macklem. "These disruptions will affect businesses and jobs, and they could drive up inflation. Trade disruptions may also mean that inflation will be more volatile."

He pointed out that the bank faces a challenge in reviving economic growth while also dealing with high prices.