TSX hits 2-week low as hawkish Fed clips tech stocks

·2 min read

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell to its lowest level in more than two weeks on Wednesday as the prospect of higher U.S. interest rates slammed technology shares.

The Toronto Stock Exchange's S&P/TSX composite index ended down 196.86 points, or 0.9%, at 21,039.66, its lowest closing level since Dec. 21.

Wall Street also closed sharply lower after U.S. Federal Reserve meeting minutes signaled the central bank may have to raise interest rates sooner than expected.

"This is a year that investors are going to be paying a lot of attention to what the central banks are going to do," said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth.

"We are seeing a rotation into the sectors that benefit from higher yields and on the flip side we are seeing tech sell off quite sharply."

Higher interest rates reduce the value to investors of the future cash flows that technology and other high growth sectors rely on to support lofty valuations.

Technology fell 3.7%, its second day of sharp losses, while the health care sector, which includes cannabis producers, ended nearly 4% lower.

In contrast, the energy sector rose 0.5%, helped by higher oil prices. U.S. crude oil futures 1.1% higher at $77.85 a barrel.

The Toronto market gained 22% in 2021, its best yearly performance since 2009, supported by massive stimulus, vaccine rollouts and hopes of a global economic recovery.

The value of Canadian building permits increased by 6.8% in November from October, data from Statistics Canada showed.

Canada's employment report for December, due on Friday, could offer further clues on the strength of the domestic economy.

(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Lisa Shumaker)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting