Canada’s main stock index slid over 1% on Friday dragged down by losses in technology and material stocks after strong growth in domestic and U.S. jobs data presented more scope for aggressive interest rate hikes by central banks to tame inflation.
At 10:10 a.m. ET (14:10 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 287.61 points, or 1.52%, at 18,691.4.
Canada added net 21,100 jobs in September, in line with forecasts, though mostly in part-time work, while the jobless rate dropped to 5.2% and wage growth remained solid.
“Given the declines of the previous three months, this is a pretty tepid rebound (in jobs growth). The unemployment rate falling, it looks like a good thing at face value, but a lot of that does reflect a lower participation rate,” said Andrew Kelvin, chief Canada strategist at TD Securities.
“I think people had been looking for wages to be roughly stable… it does reduce one angle of worry. It speaks to the deceleration in the economy.”
The Canadian central bank’s Governor Tiff Macklem on Thursday made it clear it will not yet be pivoting away from its hawkish stance.
The BoC has so far this year hiked its policy rate by 300 basis points to 3.25%, a 14-year high, and markets now atleast see a 50 bps increase later this month.
Meanwhile, the U.S. jobs data painted a similar picture and pointed to a tight labor market which will keep the Federal Reserve on its aggressive monetary policy tightening campaign for a while.
Following the data, the U.S. Treasury yields moved higher and the Canadian 10-year government bond yield climbed to its highest level since late June, pressuring the rate-sensitive tech stocks.
The tech sector index dropped 3%, the financial sector slipped 1.5%, while the industrial sector dipped 2.1%.
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