TSX Slides as Investors Brace for More Fed Rate Hikes

TSX slides

Canada’s main stock index fell more than 1% on Tuesday, including sharp declines for resource shares and the shares of BlackBerry Ltd, as hawkish remarks by Federal Reserve Chair Jerome Powell strained investor sentiment.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 239.26 points, or 1.2%, at 20,275.54, its lowest closing level since last Wednesday

U.S. stock indexes also fell after Powell told Congress the central bank will likely need to raise interest rates more than expected as it seeks to rein in stubbornly high inflation.

“We are seeing a pullback in risk assets as people start to discount the Fed keeping rates higher for longer,” said Joseph Abramson, co-chief investment officer at Northland Wealth Management.

Still, inflation and interest rate hikes could undershoot expectations and China’s economy is accelerating, helped by liquidity-boosting measures, which should be supportive of commodities, Abramson said, adding: “I think this weakness (in stocks) is something to buy, particularly the TSX.”

The TSX has a 30% weighting in commodity-linked shares.

The energy sector fell nearly 2% on Tuesday as oil settled 3.6% lower at $77.58 a barrel, while materials, which includes precious and base metals miners and fertilizer companies, was down 2.9%.

Financials lost 1.2% and technology ended 1.1% lower.

The latter was pressured by a decline of 11.7% for the shares of BlackBerry Ltd after the software firm announced a lower-than-expected annual sales estimate.

Thomson Reuters Corp shares were a bright spot, rising 1.2%. An investor consortium including it and Blackstone is selling 1.7 billion pounds ($2.01 billion) worth of shares in the London Stock Exchange Group to trim its joint stake.


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