Canadian shares hit a near two-month low on Wednesday after the country’s top two lenders reported disappointing quarterly earnings, while U.S. debt deal uncertainty also weighed on investor sentiment.
At 10:05 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 238.22 points, or 1.18%, at 19,907.79. All major Canadian sectors were in the red.
Bank of Montreal and Bank of Nova Scotia shed 3.6% and 1.7%, respectively, after reporting smaller-than-expected quarterly profits as the lenders set aside more rainy day funds amid economic uncertainty.
Bank stocks shed 1.7%, with the broader financial sector sub-index losing 1.6%.
“The bank earnings reflect that business is slowing down in general. We’re seeing a slowdown in the Canadian economy and the U.S. economy, which obviously affects our banks,” said Allan Small, senior investment advisor at Allan Small Financial Group.
The market was also tracking a gloomy global sentiment, as prolonged negotiations concerning the U.S. debt ceiling limit left investors concerned.
Canadian equities have performed poorly since late April, with the TSX on track for a fifth straight weekly loss as hotter-than-expected inflation, a weak outlook for commodities and disappointing bank earnings weighed on investor sentiment.
A Reuters poll showed the TSX would rally less than previously expected in 2023, as higher borrowing costs cooled the domestic economy and signs that China’s recovery was slowing reduced prospects for its resource-oriented sectors.
The Royal Bank of Canada dropped 1.4% after the UK competition watchdog said it had provisionally found that the bank was among five lenders that had indulged in anti-competitive activity in the past. The lender denied any wrongdoing.
Bucking the trend, Oncolytics Biotech Inc jumped 5.4%, hitting a four-month high after brokerage JonesTrading initiated coverage with a “buy” rating.
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