Interest rate hike weighs on TSX
TORONTO (Reuters) — The Toronto Stock Exchange's main index closed lower yesterday, ending three winning sessions, as it was undercut by an interest rate hike by the Bank of Canada and economic worries in the US.The S&P/TSX composite index closed down 45.59 points, or 0.3 percent, to close at 14,131.93. All of the index's 10 main groups declined except the heavyweight energy sector, which gained 0.2 percent.
The index fell early in the day, but then punched into positive territory for several hours before dropping back again. It was weighed down by a broad retreat south of the border, where stocks were hit by profit warnings on the first day of second-quarter results and growing fears of subprime mortgage defaults.
Also yesterday, the Bank of Canada raised its key interest rate 25 basis points to 4.50 percent, which pulled down rate-sensitive financial shares 0.2 percent.
"Even though the interest rate move was expected it still puts a bit of a blanket on the market, because they're talking about another increase as well," said Sal Masionis, a stockbroker at Brant Securities.
"And then the Canadian dollar being up there where it is is just killing the manufacturing and auto businesses."
Brookfield Asset Management Inc. slipped 98 Canadian cents, or 2.3 percent, to C$42.09, while Toronto-Dominion Bank slid 51 Canadian cents, or 0.7 percent, to C$72.56.
The recently hot materials sector slumped for the first time in seven sessions, hit by a retreat in metals prices. Takeover target Alcan Inc. was down 85 Canadian cents, or 0.9 percent, at C$90.20.
Telus Corp. was the heaviest drag on the index, down C$1.66, or 2.6 percent, at C$63.39, as the telecom sector sank 0.8 percent.
Oil and gas producers rose on higher commodity prices, including U.S. crude futures that flirted with $73 a barrel. Canadian Natural Resources added 81 Canadian cents, or 1.1 percent, to C$72.12.
Market volume was 352 million shares worth C$6.8 billion. Decliners outpaced advancers 838 to 771.