TSX falls to 2-month low as financials, resource stocks slide
TSX ends down 1.2% at 21,698.11
Posts its lowest closing level since April 17
Energy falls 3.1%
Financials end 1.2% lower
Updates at market close
By Fergal Smith
June 13 (Reuters) -Canada's main stock index fell to a near two-month low on Thursday, weighed by declines for financial and commodity-linked shares, as investors worried that the Federal Reserve would keep interest rates elevated for longer than previously expected.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE ended down 263.44 points, or 1.2%, at 21,698.11, its lowest closing level since April 17.
The Federal Reserve on Wednesday trimmed the number of rate cuts expected this year and raised the long-run "neutral" rate needed to keep inflation in check while maintaining steady growth.
The U.S. central bank is trying to communicate that "we're going to revert back to a more normalized interest rate environment as opposed to the 'la-la land' we've been living in prior to the rate hikes," said Michael Sprung, president at Sprung Investment, referring to the colloquial term for a dream world.
Interest rates had been at historically low levels in the years after the global financial crisis until major central banks began hiking aggressively in 2022 to tame inflation.
Higher interest rates reduce the value to investors of the expected cash flows that companies are expected to produce.
"The world has got to adjust to a more normalized valuation regime. It think it's going to be a tough adjustment for people to make," Sprung said.
Interest rate sensitive sectors such as utilities, real estate and financials account for 35% of the weighting on the Toronto market.
Financials .SPTTFS fell 1.3% and energy .SPTTEN was down 3.1%, with a decline of 3.8% for shares of Cenovus Energy Inc CVE.TO.
The materials group .GSPTTMT, which includes metal miners and fertilizer companies, lost 1.8% as gold and copper prices fell.
BlackBerry Ltd BB.TO was among the biggest decliners, with shares of the software company falling 9.2% to its lowestin nearly three months.
Reporting by Fergal Smith in Toronto and Nikhil Sharma and Shristi Achar A in Bengaluru; Editing by Shreya Biswas and Deepa Babington
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