Toronto stocks slide as Bank of Canada signals early rate hike

Canada's main stock index was on course for its worst session in a month on Wednesday after the Bank of Canada signaled it could raise interest rates sooner than previously forecast.

At 10:33 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index fell 0.73% to 21,018, with technology and healthcare stocks leading the declines.

The Canadian dollar and shorter-term yields jumped after the central bank's decision to also move the pandemic-driven bond-buying program into the reinvestment phase, where it will purchase only enough government bonds to replace those that are maturing.

The BoC said it now expects the rate hike to happen "sometime in the middle quarters of 2022", three months ahead of the previous forecast, and warned that inflation would stay above target for much of 2022 due to higher energy prices and supply bottlenecks.

"They've shifted that window sooner, so that is a little bit hawkish," said Colin Cieszynski, chief market strategist, SIA Wealth Management.

Miners, energy stocks drag TSX; central bank meet in focus

"The ending of the QE program was pretty much as expected and they were going to do it before the end of the year. Now that the election is over, it seems like they had to do it."

The energy sector dropped 1.2%, extending losses for the second session, as oil prices fell after industry data showed US crude stockpiles rose more than expected.

Meanwhile, the materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.8%.

Highlights

Capital Power Corp and Algonquin Power & Utilities Corp were the biggest decliners on the TSX.

The TSX posted four new 52-week highs and two new lows.

Across all Canadian issues there were 22 new 52-week highs and 40 new lows, with total volume of 87.92 million shares.