Advertisement

TSX posts biggest decline of 2023 in broad-based sell-off

FILE PHOTO: The facade of the original Toronto Stock Exchange building is seen in Toronto

By Shristi Achar A and Fergal Smith

(Reuters) - Canada's main stock index fell on Tuesday to its lowest closing level in nearly six weeks, with the technology and financial sectors at the forefront of broad-based declines as weak sentiment on Wall Street overshadowed domestic data showing an easing of inflation pressures.

The Toronto Stock Exchange's S&P/TSX composite index ended down 262.6 points, or 1.3%, at 20,252.64, its biggest decline since Dec. 15 and its lowest closing level since Jan. 12.

Wall Street benchmark indexes also tumbled after data showing a rebound in business activity in February stoked fears that the U.S. Federal Reserve might need to hike interest rates by more than expected to control inflation.

Canada's consumer price index report was more encouraging for investors. It showed the annual rate of inflation easing more than expected to 5.9% in January.

"Canadian inflation numbers were surprisingly positive given the overwhelming negativity surrounding inflation and rising interest rates," said Brandon Michael, a senior analyst at ABC Funds in Toronto.

"It gives the Bank of Canada the ability to continue with their plans to pause this rate hiking cycle at their next meeting in March."

Money markets expect the BoC to hold its benchmark rate steady at 4.50% on March 8.

The Toronto market's technology sector fell 1.9% as bond yields globally climbed. Higher interest rates reduce the value to investors of the future cash flows that technology companies are expected to produce.

Heavily weighted financials lost 1.4%, while the other eight major sectors also ended lower.

Teck Resources Ltd shares slipped 1.3% as the mining company posted lower-than-estimated fourth-quarter profit and said it would spin off its steelmaking coal unit.

Suncor Energy Inc was a bright spot. Its shares gained 1.9% after the company named Rich Kruger chief executive officer, effective April 3.

(Reporting by Shristi Achar A in Bengaluru and Fergal Smith in Toronto; Editing by Shailesh Kuber and Matthew Lewis)