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

Canada's main stock market in Toronto dropped sharply Wednesday as the Canadian central bank kept its benchmark interest rate unchanged and made a modest downward revision to the country's economic growth forecast for 2016 and 2017.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index lost 137.73 points, or one percent, to settle at 13,704.19 points.

According to the latest interest rate decision announced by Bank of Canada Wednesday, the central bank is maintaining its target for the overnight rate at 0.5 percent, and projects the real GDP will grow by about 2 percent in 2016 and 2.5 percent in 2017, both of which are lower than 2.3 percent and 2.6 percent in its previous expectations, respectively.

Energy declined 1.77 percent when most of the oil and gas companies were weighed by a fall in the oil prices. Encana Corporation shares plummeted 3 percent to 10.67 Canadian dollars (about 8.12 U.S. dollars) apiece and Canadian Natural Resources Limited shed 2.28 percent to 30.44 Canadian dollars per share.

The sluggish crude market has been dragging down the commodity-sensitive economy in Canada. And the investors are worried when the central bank expressed concerns about the falling oil prices and slump of prices in other commodities.

"Lower prices for oil and other commodities since the summer have further lowered Canada's terms of trade and are dampening business investment and exports in the resource sector," the Canadian central bank said in its interest rate announcement Wednesday.

Meanwhile, Health Care, down 6.04 percent, was the biggest loser by percentage, when its heavyweight Valeant Pharmaceuticals International Inc. nosedived 19.2 percent to 154.21 Canadian dollars a share, amid the recent accusations made regarding its financial reporting and operations.

The mining sector, however, went up 2.27 percent when the base metals shares rallied, with First Quantum Minerals Limited jumping 4.05 percent to 7.2 Canadian dollars a share and Teck Resources Limited going up 3.59 percent to 8.36 Canadian dollars a share.

The gold metals group, another sub-sector in the mining stocks, nevertheless, lost ground as the world's biggest gold miner Barrick Gold Corporation shrank 4.09 percent to 9.84 Canadian dollars per share.

The most weighed sector Financials closed flat when more analysts believed that the central bank will keep the current interest rate unchanged for a long time.

"We expect the bank to remain comfortably on the sidelines until the second half of 2017, when it is expected to embark on a modest pace of interest rate hikes," said Leslie Preston, an economist from TD Bank, in a report Wednesday.

On the economic front, Canada's investment in new housing construction edged up 0.4 percent from August 2014 to 4.4 billion Canadian dollars in August this year, according to Statistics Canada Wednesday.

Household spending continued to underpin economic activity and is expected to grow at a moderate pace over the projection period, the central bank said.

On the currency front, the Canadian dollar on Wednesday tumbled to 0.7612 U.S. dollar, when compared with 0.7703 U.S. dollar Tuesday, following the central bank's downward outlook for the Canadian economy in the next two years. Endit