Toronto stocks fell to an over two-week low on Wednesday led by losses in technology stocks, as investors were spooked after rating agency Fitch downgraded United States’ top credit rating, prompting them to park their money in safe-haven assets.
At 10:10 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 221.72 points, or 1.08%, at 20,311.21.
Fitch surprisingly cut the coveted U.S. government’s credit rating by one notch to AA+ from AAA on Tuesday, citing fiscal deterioration.
“It (Fitch downgrade) caught the market by surprise and that’s why you’re seeing some of the negative sentiments, but I don’t think it’s going to mean a whole lot in the grand scheme of things,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
“It will be short lived and I don’t envision this becoming a meaningful long lasting trend or causing a negative downturn,” he added.
The Fitch downgrade pushed gold prices higher helped by some bids on the safe-haven asset as confidence in the American economy soured. However, an uptick in the dollar capped gains in the bullion.
“In the short term, you might see the gold move higher just because of the perception of dollar weakness,” Small said.
Rate sensitive technology stocks lost 2.4%.
Metal prices declined on weak demand outlook after dour economic data from top consumer China. Heavily-weighted materials sector, which includes precious and base metals miners and fertilizer companies, dropped 1.3%.
Britain’s competition regulator said on Wednesday it was investigating Cameco Corp and Brookfield Renewable Partners’ $7.9 billion deal to acquire nuclear power plant equipment maker Westinghouse Electric. The stock fell 8% and was among the worst performers on the benchmark index.
Canadian-listed shares of Thomson Reuters Corp, rose more than 1% after it reported higher sales and operating profit in the second quarter.
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