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PrintCANADA STOCKS-Toronto stocks drop in a selloff sparked by strong US payrolls data
BY Reuters | ECONOMIC | 11:00 AM EST(Updates with market opening prices)
By Nikhil Sharma
Jan 10 (Reuters) - Canada's main stock index tumbled over 1% on Friday after a stronger-than-expected U.S. payrolls data sparked fears of a highly cautious approach towards interest rate reduction by the Federal Reserve this year.
The Toronto Stock Exchange's S&P/TSX composite index was down 1.08%, or 270.43 points, at 24,802.93 points, marking its worst day since December 18 and its first weekly loss in three weeks.
U.S. job growth unexpectedly accelerated in December, while the unemployment rate fell to 4.1% as the labor market ended the year on a solid footing.
"Good news is bad news once again," said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth, and added that strong data might prevent the Fed from cutting rates this year and could even prompt discussions about raising them.
Wall Street's main indexes also fell on Friday with the benchmark S&P 500 at a two-month low
The yield on the U.S. 10-year benchmark Treasury note shot up to its highest level since November 2023 after the data, while its Canadian counterpart jumped as much as 12 basis points.
This weighed on rate-sensitive real estate sector, which fell 1.1%. Utilities, often traded as a bond proxy, also declined 1.2%.
Economically sensitive financials, which has the heaviest weighting on the index, lost 1.5%. Moreover, the information technology took a massive hit, sliding 2.9%.
Higher long-term rates decrease the present value of the future cash flows that technology and high-growth companies are expected to generate.
Meanwhile, Canada's economy added nearly four times the number of jobs forecasted for December, and the unemployment rate surprisingly ticked down to 6.7%, signaling positive news for the central bank's growth efforts.
Among individual stocks, cannabis firm Tilray Brands
