CANADA STOCKS-TSX falls by most since November on hawkish central bank outlook

BY Reuters | ECONOMIC | 01/21/22 05:07 PM EST

(Adds investor quotes and details throughout, updates prices)

* TSX ends down 436.79 points, or 2.1%, at 20,621.39

* Posts its lowest closing level since Dec. 20

* Technology and energy both fall 3.4%

* Shares of Shopify Inc (SHOP) tumble 13.4%

By Fergal Smith

TORONTO, Jan 21 (Reuters) - Canada's main stock index on Friday fell to a one-month low as uncertainty about the pace of expected central bank interest rate hikes left buyers waiting on the sidelines for a deeper pullback before stepping in.

The Toronto Stock Exchange's S&P/TSX composite index ended down 436.79 points, or 2.1%, at 20,621.39, its biggest decline since Nov. 30 and its lowest closing level since Dec. 20.

Wall Street's main indexes also ended sharply lower as weak corporate earnings added to pressure on technology shares.

"Another day with a sea of red," said Chhad Aul, chief investment officer & head of multi-asset solutions at SLGI Asset Management Inc.

"The theme so far this year has been a real focus on central banks becoming much more hawkish, whether it is the Fed in the U.S. or the Bank of Canada here at home."

Investors have raised bets that the Bank of Canada hikes its benchmark interest rate at a policy announcement next Wednesday. The Federal Reserve is also due to make a decision on interest rates next week.

Meanwhile, domestic data showed that retail sales most likely fell by 2.1% in December as authorities imposed restrictions to fight the Omicron variant of the coronavirus.

"We are watching carefully for an opportunity to add a little bit of risk. We are looking for panic selling," Aul said.

Shares of Shopify Inc (SHOP), Canada's flagship tech company, tumbled 13.4%. It started the year as the most valuable company on the Toronto market but has since lost C$79 billion ($63 billion) of its market capitalization, or 36%.

The technology group and energy both fell 3.4%, with the latter contending with a dip in oil prices.

U.S. crude prices settled 0.5% lower at $85.14 a barrel as investors took profits after the global benchmarks touched seven-year highs this week.

The heavily-weighted financials group lost 1.2% and the materials group, which includes precious and base metals miners and fertilizer companies, ended 2.5% lower. ($1 = 1.2580 Canadian dollars) (Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru Editing by Marguerita Choy)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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