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Roundup: Canadian stock market loses ground after central bank's interest rate decision

Xinhua, September 10, 2015 Adjust font size:

Canada's main stock market lost ground Wednesday after the country's central bank maintains its interest rate target.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index dropped 98.82 points or 0.72 percent to 13,531.85 points on the closing bell.

Bank of Canada, the central bank, announced Wednesday that it is maintaining its target for the overnight rate at 0.5 percent, saying the stimulative effects of previous interest rate cuts are working their way through the Canadian economy, and disinflationary pressures from economic slack are being offset by transitory effects of the past depreciation of the Canadian dollar and some sector-specific factors.

The Bank's decision to leave rates unchanged was not surprising to investors. However, according to Brian DePratto, an economist from TD Bank, another rate cut will be possible if economic risks are tilted to the downside, especially when "commodity prices remain weak, with a high degree of uncertainty around the Chinese growth outlook."

Most of the eight sectors in the TSX made the downwards correction after a big rally on Tuesday, with energy shares leading the fall by 2.14 percent as oil and gas producer Canadian Natural Resources Ltd. tumbled 2.51 percent to 27.18 Canadian dollars (about 20.52 U.S. dollars), and Canadian Oil Sands Ltd. plunged 3.06 percent to 6.33 Canadian dollars per share.

By contrast, the mining sector was modestly higher by 0.31 percent when basic metals giant Teck Resources Ltd. added 5.9 percent to 9.15 Canadian dollars.

Canada's resource sector continues to adjust to lower prices for oil and other commodities, with some spillover to the rest of the economy. And these adjustments are complex and are expected to take considerable time, Bank of Canada said in its interest rate announcement.

Other losers included healthcare and info tech stocks, down 1.57 percent and 1.12 percent respectively, and financials, the most influential sector, edged down 0.36 percent with Bank of Nova Scotia down 0.97 percent to 58.92 Canadian dollars.

On the currency front, the Canadian dollar moved lower to 0.7547 U.S. dollar Wednesday compared with 0.7573 U.S. dollar on Tuesday. Enditem