Tech, miners drag TSX to March 2021 lows after hot US inflation data

Oct 13 (Reuters) – Canada’s main stock index fell for the sixth straight session on Thursday due to losses in technology and mining shares, with a surge in US inflation raising fears of more big interest-rate hikes in the world’s largest economy.

At 10:04 am ET (14:04 GMT), the Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) slumped 162.73 points, or 0.89%, at 18,043.55, its lowest level since March 2021, and in line with a fall on Wall Street.

The US Labor Department’s report showed the headline consumer price index gained at an annual pace of 8.2% in September, compared with an estimated 8.1%. Core CPI, which eliminates volatile food and fuel prices, gained 6.6% last month, compared with the estimates of a 6.5% increase.

“Canadian markets are under pressure along with markets worldwide, because the US reports suggested that the pressure remains on the central banks to remain hawkish,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

Rate-sensitive technology stocks (.SPTTTK) tumbled 2.4% tracking its US peers on the Nasdaq, as government bond yields climbed in anticipation of aggressive interest rate hikes.

As the world braces for another 75 basis point rate hike by the Fed in November, analysts expect the Bank of Canada will ease to a 50 basis points later this month. Domestic inflation data is expected next week.

“It is possible that if inflation remains high the central bank may continue to do another 75 basis point hike, that’s certainly within the realm of possibility,” Cieszynski said.

Riskier assets have taken a hit this year as investors worry aggressive rate hikes could trigger a global economic downturn. The TSX is down 15% so far this year and was on pace for its worst annual performance since 2008.

The materials sector (.GSPTTMT), lost 3% after the world’s second largest miner, Barrick Gold Corp (ABX.TO) said its full-year gold production is expected to be at the lower end of the range it prior forecast due to a rise in production cost guidance. Barrick’s stock slumped 5.4%.

Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru

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