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Roundup: Canadian stock market drops amid announcements from central bank, U.S. Fed

Xinhua, December 3, 2015 Adjust font size:

Canada's main stock market in Toronto on Wednesday declined sharply as the Canadian central bank decided to keep its benchmark interest rate unchanged while the U.S. Federal Reserve Chairwoman Janet Yellen signaled to lift interest rates this month.

The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index dived 172.24 points, or 1.26 percent, to close at 13,463.82 points, with all the eight major sectors falling into the negative territory.

Big losses were seen in the energy sector and the mining sector, which tumbled 3.48 percent and 2.49 percent, respectively, over the sluggish commodities market including oil and gold prices, after Yellen highlighted her confidence in the U.S. economy Wednesday, saying that she was "looking forward" to an interest rate hike.

Oil prices plunged, with the light, sweet crude for January delivery going lower 1.91 U.S. dollars to settle at 39.94 U.S. dollars a barrel, while the most active gold contract for February delivery fell 9.7 U.S. dollars to settle at 1,053.80 U.S.. dollars per ounce on the New York Mercantile Exchange Wednesday.

Analysts believed that lift in Fed's interest rate will lead to an appreciation in the U.S. dollar whose dominant influence tended to be high sensitivity related to a large share of commodity exports, with prices of globally traded commodities moving inversely with the U.S. dollar, according to a report released by TD Bank Wednesday.

Meanwhile, Bank of Canada, the central bank in this country, decided to maintain its overnight rate target at 0.5 percent Wednesday, which is in line with the market's expectation.

The most influential sector Financials was also lower 0.29 percent when the bank said that the economy continues to undergo a complex and lengthy adjustment, which is being aided by the ongoing recovery in the U.S., a lower Canadian dollar and the bank's monetary policy easing this year. According to the bank, the business investment continues to be weighed down by cuts in resource-sector spending.

The major losers in TSX Wednesday were from resources sectors, as the oil and gas provider Encana Corporation nosedived 8.03 percent to 10.20 Canadian dollars (about 7.64 U.S. dollars) a share while the gold giant Barrick decreased 2.56 percent to 9.90 Canadian dollars a share and the base metals miner Teck Resources Limited shed 5.76 percent to 5.24 Canadian dollars a share.

On the currency front, the Canadian dollar on Wednesday moved higher to 0.7491 U.S. dollar at 4 O'clock (the Canadian Eastern Daylight Time), when compared with 0.7483 U.S. dollar Tuesday. Endit