By Ketki Saxena
Investing.com - At the close in Toronto, the S&P/TSX Composite Index was at 19,004.04 points, down 1.32% in the day’s trading, underperforming its counterparts south of the border as the commodity-heavy index was pressured by energy and metals, and weighed down by today’s hotter than anticipated domestic inflation data.
Canadian inflation soared 7.7% up from 6.8% in the previous month, and far higher than economist estimates of 7.3%. The jump in CPI, which takes inflation to a 40 decade high, raises the case for a 75 basis point hike from the Canadian central bank. Analysts note that this relatively aggressive move from the conservative Canadian central bank has now been largely priced into the market.
Most TSX sectors were in the red at the close as rate-hike expectations pressured Canadian equities, with the index most pressured by commodities including energy (-5.35%) and materials (-2.25%).
Crude oil fell 3.93% to hit $105.22 a barrel, while Brent oil fell 3.40% to trade at $110.75 a barrel as the commodity was hit by ongoing concerns of slowing economic growth, and further pressured by U.S. President Joe Biden’s plan to cut fuel costs for drivers amid concerns over a recession and soaring inflationary pressures.
Materials, meanwhile, were weighed down by broad based losses in metals, including copper’s decline to a 1 year low. Known as a bellwether for the economy due to its wide use in a range of industries, the metal is also being pressured by concerns of an economic slowdown. Gold ,however, managed to eke out a 0.07% gain as the dollar weakened and U.S. yields retreated.
The biggest gainers of the session on the S&P/TSX Composite were Kinaxis Inc (TSX:KXS) , which rose 4.09% or 5.21 points to trade at 132.50 at the close. Shopify (TSX:SHOP) Inc added 3.49% or 14.80 points to end at 438.64 and TransAlta Corp was up 2.81% or 0.38 points to 13.91 in late trade.
Biggest losers included Baytex Energy Corp (TSX:BTE), which lost 12.01% or 0.86 points to trade at 6.30 in late trade. Athabasca Oil Corp declined 10.80% or 0.31 points to end at 2.56 and Ivanhoe Mines Ltd. (TSX:IVN) shed 9.64% or 0.81 points to 7.59.
In New York, the Dow Jones Industrial Average declined 0.15%, while the S&P 500 index declined 0.13%, and the NASDAQ Composite index lost 0.15%.
U.S. equities partially bounced back from last week’s heavy sell-off, after the Fed Chair reinforcing his belief in the strength of the U.S. economy and its ability to weather rising rates.
While remaining “strongly committed” to bringing down inflation that is running at a 40-year high, Powell noted the pace of change would be appropriate in reaction to key economic data.
In Bonds and Currencies
Further to Fed comments the US dollar index remained above 104, but fell 0.23% against a basket of currencies, but gained 0.15% against the Canadian dollar, which remained pressured by crude.
Yields also pulled back, with the Canadian 5 year 0.052 points lower at 3.359%, the Canadian 10 year 0.053 points lower at 3.447%, and the U.S. 10 year 0.149 points lower at 3.156%.