Canada's main stock index fell on Friday as major mining stocks tracked weakness in metal prices on prospects of a tighter monetary policy, while gains in the energy sector helped limit losses.
At 9:53 a.m. ET, the Toronto Stock Exchange's S&P/TSX composite index was down 38.71 points, or 0.19%, at 20,505.4. The index was set to lose 0.6% this week, its second straight week of losses.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.0%, as gold and base metal prices fell on hawkish signals from the Bank of Canada and the Federal Reserve.
Investors are now pricing in at least five interest rate hikes by the Fed in 2022, which will bring an end to the accommodative, high-liquidity environment that boosted stock markets over the past two years.
Gains in energy stocks, which rose 1.2% tracking strong oil prices, limited further losses on the TSX.
Toronto index set for biggest weekly drop since early December
"In our bear case, fears about inflation would lead the Fed to increase rates more aggressively than markets currently expect," UBS Global Wealth Management Chief Investment Officer Mark Haefele said.
"Tighter monetary policy would have a meaningful negative impact on multiples, while earnings growth would likely also be negatively affected by tighter financial conditions and weaker consumer demand."
Highlights
The TSX posted two new 52-week highs and 13 new lows.
Across Canadian issues, there were eight new 52-week highs and 101 new lows, with total volume of 52.79 million shares.
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