TSX hits 6-week low as resource shares slide

·1 min read
The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

(Reuters) - Canada's main stock index fell on Tuesday to its lowest closing level in six weeks as the energy and materials sectors led broadbased declines and investors bet on another outsized interest rate hike from the Bank of Canada this week.

The Toronto Stock Exchange's S&P/TSX composite index ended down 182.58 points, or nearly 1%, at 19,088.27. after it was closed on Monday for the Labour Day holiday.

It was the lowest closing level for the TSX since July 26. The index has given back about 60% of its rally between mid-July and mid-August.

Wall Street's main indexes also fell on Tuesday as a stronger-than-expected reading on the U.S. services sector fueled expectations that the Federal Reserve will keep raising interest rates to tame inflation.

The Bank of Canada has also been tightening monetary policy. It is expected to hike its benchmark rate by three-quarters of a percentage point on Wednesday, lifting it into restrictive territory for the first time in two decades.

A question for investors to consider "is not only how high rates may have to go but how long they may need to remain elevated," Colin Cieszynski​, chief market strategist at SIA Wealth Management Inc, said in a note.

All of the TSX's major sectors lost ground, including a decline of 2% for energy. Materials, which includes precious and base metals miners and fertilizer companies, ended nearly 1% lower as gold dipped below 1,700 per ounce.

Heavily weighted financials fell 0.8% and consumer discretionary was down 1.3%.

(Reporting by Fergal Smith; Additional reporting by Aniruddha Ghosh in Bengaluru; Editing by Anil D'Silva, Vinay Dwivedi and Jonathan Oatis)