Band Fergal Smith
TORONTO, June 22 (Reuters) – Canada’s main stock index fell on Wednesday as a drop in commodity prices weighed on resource stocks and warmer-than-expected domestic inflation data stoked concerns over aggressive interest rate hikes. ‘interest.
The Toronto Stock Exchange S&P/TSX Composite Index .GSPTSE ended down 253.25 points, or 1.3%, at 19,004.04.
“What we’re seeing is commodity prices coming back down and that’s weighing on resource stocks,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The energy sector fell 5.4% as the prospect of slowing economic growth weighed on oil prices. U.S. crude oil futures CLc1 settled down 3% to $106.19 a barrel.
The materials group, which includes precious and base metal miners and fertilizer companies, lost 2.3% as copper prices HGc1 fell to its lowest level in over a year.
Together, the energy and materials sectors represent 31% of the Toronto market.
Heavily weighted financials were also a drag, down 1.2%.
Canada’s annual inflation rate accelerated to 7.7% in May, a pace not seen since January 1983, driven by high gasoline prices.
“This just adds further evidence that the Bank of Canada is likely going to have to accelerate interest rate hikes,” Cieszynski said.
Money markets are expecting a rate hike of three-quarters of a percentage point in the Bank of Canada’s next monetary policy announcement on July 13, which would be the biggest hike in 24 years.
The TSX is on track to fall 13.2% in the second quarter, which would be its biggest quarterly drop since March 2020.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Jonathan Oatis)
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