Canada’s resource heavy main stock index fell on Wednesday after a drop in the sector and others including energy and materials added to the dour sentiment from data showing slower-than-expected growth in the domestic economy.
At 10:25 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 71.86 points, or 0.37%, at 19,441.04. The index is headed for its fourth straight decline, and is down 1.2% for the month mainly due to falls in oil prices.
The energy sector dropped 0.6% as crude prices continued to slide on worries about a slowing global economy, bearish oil demand signals from OPEC+ and increased COVID-led restrictions in China.
Canada’s statistics agency data showed economic growth lagged in the second quarter and most likely dipped into negative territory in July, signaling the economy may be cooling more quickly than expected.
The negative print for July suggests third-quarter growth will come in short of the Bank of Canada’s forecast of 2%, said economists. Still it was unlikely to sway the central bank from its current tightening path.
“Central banks are worried more about inflation than they are about the possibility of a recession,” said Michael Sprung, president at Sprung Investment Management.
The healthcare sector jumped 2.5% after Bausch Health soared more than 20%.
Money markets see a roughly 75% chance that Bank of Canada will increase rates by 75 basis points next week.
Meanwhile, gold prices were on track to post their longest streak of monthly losses since 2018 as traders anticipated more interest rate increases by central banks to combat inflation. The TSX materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4%.
“We could have quite a bit of choppiness in the weeks ahead,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
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