TSX breaks 7-day winning streak on growth concerns

  • Canada‘s first quarter growth disappoints
  • BoC sees interest rates rise 50 basis points on Wednesday
  • Yamana Gold bids $6.7 billion
  • Cenovus to restart West White Rose oilfield project next year

May 31 (Reuters) – Canada’s main stock index tried to break a seven-day winning streak on Tuesday as the prospect of aggressive monetary tightening by central banks stoked fears of a global economic slowdown .

Record inflation in the euro zone and hawkish comments from a US Federal Reserve governor have raised bets that central banks may need to tighten monetary policy faster or more than expected, leaving investors worried about the impact on Economic Growth.

The Bank of Canada is expected to raise its key rate by 50 basis points to 1.5% on Wednesday to rein in soaring inflation, which hit a more than three-decade high in April. Read more

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The widespread losses saw the Toronto Stock Exchange’s S&P/TSX Composite Index (.GSPTSE) slip 212.29 points, or 1.01%, to 20,707.11, after adding 4% in the past seven sessions.

“The US Federal Reserve is going to have to raise interest rates more than the market expects to bring inflation down. That would be negative,” said Bill Harris, partner and portfolio manager at Avenue Investment Management in Toronto.

“Earnings are really going to be impacted in the fall, because we’re going to have a much more recessionary economy than the markets are predicting.”

Tuesday’s data showed Canada’s economic growth was not as robust as expected in the first quarter, driven by lower export volumes. Read more

The technology (.SPTTTK) and healthcare (.GSPTTHC) sectors lost the most, both down more than 2%, while the energy sector (.SPTTEN) fell 1.1 % despite rising oil prices. Read more

STRONG POINTS

The biggest percentage gainer on the TSX was Yamana Gold Inc (YRI.TO), which jumped 4.4% after South African-based Gold Fields Ltd (GFIJ.J) bid 6, 7 billion dollars for the gold miner.

Cenovus Energy Inc (CVE.TO) rose 1.6% after announcing that the West White Rose oilfield project off Newfoundland and Labrador in Canada would restart in 2023. It quickly gave up gains, caught up by the broader declines. Read more

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Reporting by Susan Mathew in Bengaluru; Editing by Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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