CANADA STOCKS-Tech drags TSX lower as rate worries mount

BY Reuters | ECONOMIC | 09/26/23 11:27 AM EDT


Tech falls the most among sectors


Energy stocks edge up


TSX down 0.7%

By Khushi Singh

Sept 26 (Reuters) - Canada's main stock index fell on Tuesday, mirroring weakness on Wall Street, as U.S. Treasury yields touched multi-year highs on bets of interest rates staying elevated for a longer time.

At 10:55 a.m. ET (1455 GMT), the Toronto Stock Exchange's S&P/TSX composite index was down 139.33 points, or 0.7%, at 19,661.28, while Wall Street's main indexes fell about 1% each.

Canada's tech index saw the steepest decline among sectors, down 1.5%, as surging government bond yields hurt the rate-sensitive group.

U.S. bond yields have surged recently, with the benchmark 10-year Treasury yield touching its highest since October 2007 on Tuesday, as comments from Federal Reserve officials and economic data cemented bets that interest rates will not fall anytime soon.

"Investors are becoming 'Fed fatigued' ...trying to comprehend if there's a way out of a recession, and the current thinking is that higher rates will squash any growth stocks," said Peter Anderson, founder of Andersen Capital Management.

The materials sector, which includes precious and base metals miners and fertilizer companies, fell 0.8% as gold and copper prices slipped against a stronger dollar.

Copper prices also took a hit from concerns over China's property sector along with a week-long holiday in China starting on Sept. 29.

The energy sector marked its third consecutive session of gains, adding 0.8% as oil prices moved upwards.

The likelihood of a partial shutdown of the U.S. government by Sunday also added to investor anxiety.

Meanwhile, Canadian wholesale trade most likely rose 2.6% in August from July after higher sales in the machinery, equipment and supplies subsector and the miscellaneous subsector, Statistics Canada said in a flash estimate.

On the corporate front, Westshore Terminals Investment (WTSHF) led declines, falling 8.2% after RBC downgraded the stock to "sector perform" from "outperform". (Reporting by Khushi Singh in Bengaluru; Editing by Tasim Zahid)

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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