Canada’s main stock index fell to a near four-week low on Wednesday, with the resource and interest rate-sensitive sectors leading a broad-based sell-off as investors grew less optimistic of an early rate cut by the Federal Reserve.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 253.07 points, or 1.2%, at 20,695.02, its biggest decline since Oct. 18 and its lowest closing level since Dec. 20.
“Clearly, the market is recalibrating its expectations as to when rate cuts are likely to happen, and that’s putting some pressure obviously on equities,” said Mike Archibald, vice president and portfolio manager at AGF Investments.
U.S. bond yields rose and Wall Street stocks fell after upbeat U.S. retail sales data eroded expectations the Fed will kick off its interest rate cutting campaign as soon as March.
Inflation in Canada is likely to remain a bigger threat than in the United States due to the high growth in Canadian wages and shelter costs, which could see Canada’s central bank shifting to interest rate cuts after the Fed, analysts say.
All 10 major sectors on the Toronto market lost ground, including deep declines for stocks that pay high dividends and could particularly benefit from rate cuts. The utilities group lost 1.9% and real estate was down 2.3%.
The energy and materials sectors fell 1.4% and 2.4% respectively as disappointing economic growth in China spurred concerns about the demand outlook for commodities.
The price of oil CLc1 settled 0.2% higher at $72.56 a barrel but copper HGc1 fell and gold XAU= slid on a stronger U.S. dollar .DXY.
Canadian miner First Quantum Minerals FM.TO has delivered an initial preservation and management plan to the Panamanian trade ministry regarding its lucrative copper mine in the country, the miner’s Panamanian unit said. The company’s shares were down 6.7%.
