The S&P/TSX Composite Closed Almost 200 Points Down, US Stock Markets Pulled Back Too

Toronto –

Canada’s main stock index closed down nearly 1 percent in broad-based declines on Tuesday, similar to losses in US stock markets on a daily basis ahead of the Fed’s latest interest rate decision.

The S&P/TSX Composite Index closed 193.69 points lower at 19368.69 after trading as low as 19246.77 in mid-afternoon trading.

The declines in the Toronto market came despite Statistics Canada’s August inflation data that came in below analyst expectations, slightly dampening expectations of an upcoming interest rate hike from the Bank of Canada. Portfolio Management Corp managing director Anish Chopra said the Canadian data, however, was overshadowed by what’s happening in other markets.

“US markets and what is happening in Europe are already driving a lot of the action. You still get high inflation readings across Europe. If you look at the US, investors are waiting for the Fed’s policy decision.”

Chopra said the Fed had long been expected to raise its policy rate by three-quarters of a percentage point on Wednesday, but the chances of a higher increase grew after last week’s higher-than-expected inflation data from the United States.

“With more inflation data coming in, the chance of let’s say a 100 basis point increase tomorrow increases.”

Expectations of an impending interest rate hike put pressure across a range of sectors on Tuesday, as well as commodities such as oil, gold and copper.

The declines included higher declines for growth-oriented stocks such as Shopify Inc. , down 5.2 percent, the broader S&P/TSX information technology index fell 2.2 percent, while the base metals index fell 1.6 percent and the financial index fell. 0.9%.

In New York, the Dow Jones Industrial Average closed 313.45 points lower at 30,706.23. The S&P 500 lost 43.96 points to 3,855.93, while the Nasdaq Composite fell 109.97 points to 11,425.05.

Chopra said Canada’s inflation data, which came in at 7.0 percent for the past month, was less than expected at 7.3 percent to reduce expectations for an interest rate hike by half a percentage point next month.

Easing expectations for a Canadian interest rate hike, along with rising expectations in the United States, helped further decline in the Canadian dollar, which traded at 74.93 US cents compared to 75.26 US cents on Monday.

“There is a problem that the Bank of Canada may slow the rate increases, but the US will continue to cut rates and that puts pressure on the Canadian dollar,” Chopra said.

The Canadian dollar slipped from around 78 US cents in mid-August on interest rate expectations and lower commodity prices.

On Tuesday, the November crude oil contract was down $1.42 to $83.94 a barrel, and the October natural gas contract was down 3.5 cents at $7.72 per million British thermal units.

The December gold contract fell $7.10 to $1,671.10 an ounce and the December copper contract was down a penny at $3.50 a pound.

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This report was first published by The Canadian Press on September 20, 2022.

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