Canada’s main stock index fell more than 1% on Thursday, with materials and technology shares leading declines as minutes from the U.S. Federal Reserve’s June meeting sparked concerns of more interest rate hikes.
At 10:04 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 226.3 points, or 1.13%, at 19,877.59.
Rate-sensitive technology stocks lost 1.9%, while the real estate sector fell 1.5%.
The materials sector, which houses Canada’s major mining firms, slipped 1.8% as copper prices came under pressure following a weak global economic growth outlook and tepid demand in top consumer China.
Minutes released on Wednesday showed a united Fed agreed to hold interest rates steady at the June meeting, even as the vast bulk expected they would eventually need to tighten policy further.
Major indexes on Wall Street also dropped as U.S. economic data signaled a resilient labor market.
“The TSX is trading cautiously today as market participants digest the surprisingly hot ADP jobs report,” said Brandon Michael, senior investment analyst at ABC Funds.
“Focus is turning to higher for longer interest rates, which is weighing on the markets today.”
Energy stocks lost 1.7%, tracking lower crude prices.
Volatile commodity prices, coupled with surging global interest rates have led to the resources-heavy TSX underperforming compared with its U.S. counterparts.
The Canadian benchmark is up 2.5% so far this year versus a 14.5% gain the U.S. S&P 500.
Among individual stocks, Aritzia slumped to the bottom of the TSX, down 6.6%, after BofA Global Research downgraded the apparel and accessories retailer’s shares to “underperform” from “neutral”.
Magna International gained 3.7% after BofA upgraded the automotive supplier’s shares to “buy” from “neutral”.
Meanwhile, data from Statistics Canada showed Canada recorded a surprise trade deficit in May as energy and grains dragged down exports.
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