TSX falls from 1-month high amid Fed rate hike jitters

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TSX falls from 1-month high amid Fed rate hike jitters

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TSX falls from 1-month high amid Fed rate hike jitters
Image source: © Ipopba | Megapixl.com

Highlights

  • TSX slipped 241.08 points, or 1.2%, to 20,790.73.
  • For the week, the index rose 0.2%.
  • Technology sector slid 3.7% while consumer discretionary shares fell 2.5%.

Canada's main stock index fell on Friday, pulling back from its highest level in nearly one month the day before, as robust US jobs data bolstered expectations for aggressive interest rate hikes by the Federal Reserve.

The Toronto Stock Exchange's S&P/TSX composite index ended down 241.08 points, or 1.2%, at 20,790.73, after posting on Thursday its highest closing level since May 4.

For the week, the index was up 0.2%, its third straight weekly advance.

One-year price chart (June 6). Analysis by © 2022 Kalkine Media®

US stock indexes also fell on Friday after US data showed that nonfarm payrolls rose by 390,000 jobs last month, while the unemployment rate held steady at 3.6%, signaling a tight labor market.

"With nonfarm payrolls indicating continuing job growth, and average hourly earnings indicating high wage inflation, investors don't appear to be seeing any reason for the Fed to slow its monetary tightening program," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Also read: TSX soars past 21,000 points despite energy in red, loonie gains

Canada's central bank on Wednesday raised interest rates by half a percentage point for the second straight policy meeting.

Higher rates reduce the value of future cash flows to investors, which is a particular headwind for high-growth technology companies.

On the Toronto market, shares of e-commerce giant Shopify Inc (TSX: SHOP) tumbled 11.2%, while the technology sector ended 3.7% lower.

TSX movers and laggards of the day

The consumer discretionary group fell 2.5%, while heavily-weighted financials were down 1.1%.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 1.8% as gold prices fell.

Among the few sectors that gained ground was energy. It ended up 0.3% as oil prices rose.

US crude prices settled 1.7% higher at US$118.87 a barrel on expectations that OPEC's decision to increase production targets by slightly more than planned will not much affect tight global supply.

Also read: 8 reasons why you can save your retirement income in TFSA

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