By Fergal Smith
TORONTO (Reuters) - Canada's main stock index fell on Wednesday as a drop in commodity prices weighed on resource shares and hotter-than-expected domestic inflation data fueled worries about aggressive interest rate hikes.
The Toronto Stock Exchange's S&P/TSX composite index ended down 253.25 points, or 1.3%, at 19,004.04.
"What are seeing is that commodity prices are coming back down and that's dragging on resource stocks," said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The energy sector tumbled 5.4% as the prospect of slower economic growth weighed on oil prices. U.S. crude oil futures settled 3% lower at $106.19 a barrel.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 2.3% as copper prices slumped to their lowest level in over a year.
Combined, the energy and materials sectors account for 31% of the Toronto market.
Heavily weighted financials were also a drag, falling 1.2%.
Canada's annual inflation rate accelerated to 7.7% in May, a pace not seen since January 1983, driven by pricey gasoline.
"That just adds more evidence that the Bank of Canada is probably going to need to accelerate interest rate hikes," Cieszynski said.
Money markets expect a three-quarter-percentage-point rate increase at the Bank of Canada's next 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 decline since March 2020.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Jonathan Oatis)