Canada’s main stock index fell on Friday as worries about an aggressive policy stance by major central banks hurt risk appetite even as data showed domestic retail sales rose unexpectedly in June.
At 10:23 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 123.67 points, or 0.61%, at 20,141.7.
Global stocks slipped and the dollar gained ground as investors digested comments from U.S. Federal Reserve policymakers that signaled further interest rates were on the horizon, while European data pointed to elevated inflationary pressures.
The Canadian energy sector dropped 0.3% even as oil prices recouped from losses earlier in the session.
“A strong U.S. dollar is not good for multinationals, because of the oil exposure in our country. Besides, globally there are a lot of cross currents revolving around oil,” said Allan Small, senior investment advisor at HollisWealth Inc.
Data earlier showed Canadian retail sales rose 1.1% in June, easily beating forecasts, on pricier gasoline and higher sales at car dealerships, but sales were seen falling in July.
All eyes are now on the Fed’s annual Jackson Hole symposium next week.
“The central banks have a very complex balancing act. They want to slow down the economy too much. They don’t want it too hot or too cold, they want it just right,” Small added.
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Canadian banks, which will begin reporting results next week, are on average expected to post profit declines in the third quarter as a murky economic outlook drives up provisions for credit losses (PCL), analysts and investors said.
The financials sector slipped 0.7%. The industrials sector fell 0.2%.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.1% as gold futures fell 0.3%.
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