Canada’s main stock index tumbled on Friday, marking its third consecutive weekly decline, as domestic and U.S. data showed more-than-expected job additions in September, spurring speculation of another interest rate hike this year.
At 10:29 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 147.94 points, or 0.77%, at 18,989.87.
U.S. job growth surged in September, suggesting that the labor market in the world’s largest economy remains strong enough for the Federal Reserve to raise interest rates this year, though wage growth moderated.
Canada added 63,800 jobs in September, three times the expected number, even as wages continued to soar, increasing the chances for another rate hike by the Bank of Canada.
Money markets increased bets on a domestic rate hike later this month after the employment figures were published. They now see about a 40% chance for a hike in October compared to a 28% chance before the data came out.
“Markets have taken the jobs data as an indication that the economy is strong, which is certainly good for corporate earnings,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
“However, it has also sparked a sell-off, which is more related to monetary policy than to corporate earnings.”
Markets saw an uptick in long-term government bond yields, and the dollar strengthened over fears of interest rates staying elevated for longer.
Rate-sensitive real estate stocks fell 1.8%, while the materials sector, which includes precious and base metals miners and fertilizer companies, gained 0.2% despite a fall in the prices of most metals.
The energy sector clocked its worst weekly performance in seven months, down 0.3%.
The healthcare sector slipped 2.2%, weighed down by a 3.1% fall in Tilray Brands shares as TD Cowen slashed its price target for the cannabis-lifestyle company. Canada’s largest airline, Air Canada fell 0.7% after CIBC cut its price target on the stock over fuel hike concerns.
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