Canada Stocks: TSX ends lower as BoC rate hike spooks investors

North West

07/06/2023 21:43

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      TSX ends down 0.4% at 19,983.69
    

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      BoC raises policy rate by 25 basis points
    

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      Technology falls 3.4%
    

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      Materials sector ends down 0.9%
    

  
 (Adds details on North West Company in ninth paragraph)
    By Fergal Smith
       June 7 (Reuters) - Canada's main stock market fell on
Wednesday, including declines for technology and gold mining
shares, as the Bank of Canada raised its benchmark interest rate
for the first time since January.
    The Toronto Stock Exchange's S&P/TSX composite index
 .GSPTSE  ended down 71.91 points, or 0.4%, at 19,983.69,
pulling back from the previous day's close which was its highest
in two weeks. 
    "Stocks are declining after investors got spooked when the
Bank of Canada restarted their rate hiking campaign," Edward
Moya, a senior market analyst at OANDA, said in a note.
    The Bank of Canada hiked its benchmark interest rate by 25
basis points to a 22-year high of 4.75%, and markets and
analysts immediately forecast another increase next month to
ratchet down an overheating economy and fight stubbornly high
inflation.
    "Today's message that more hikes are coming is resetting
many peak terminal rate bets," Moya said.   
    U.S. benchmark the S&P 500 also ended lower. The U.S.
Federal Reserve is due to make an interest rate decision next
week.
    The Toronto market's technology sector fell 3.4%, giving
back some recent gains. Higher interest rates are a particular
headwind for technology, reducing the value to investors of the
future cash flows that companies in that sector are expected to
produce.
    The materials sector, which includes precious and base
metals miners and fertilizer companies, lost 0.9% as the price
of gold dropped.
    Shares of North West Company Inc  NWC.TO  were a drag on the
consumer staples sector, dropping 10.8% after the food retailer
reported quarterly profit below analyst estimates. That weighed
on the consumer staples sector.
    In contrast, industrials advanced 0.6%, while energy was up
1.2% as the price of oil settled 1.1% higher at $72.53 a barrel.

 (Reporting by Fergal Smith in Toronto and Ankika Biswas and
Shashwat Chauhan in Bengaluru; Editing by Marguerita Choy and
David Gregorio)
 ((fergal.smith@thomsonreuters.com; +1 647 480 7446;))