The S&P/TSX Composite Index dropped 1.7% to close at 35,042 on Wednesday, as renewed worries over elevated bond yields pressured earnings expectations across credit-sensitive sectors. Earlier gains in oil prices faded, easing some inflation concerns, but financial conditions remained tight. Minutes from the latest US Federal Reserve FOMC meeting showed policymakers broadly agree that interest rates must stay higher to bring inflation under control.
Canadian government bonds fell, adding further pressure on rate-sensitive equities. Among the major banks, RBC declined 2.3% and TD Bank slid 3.3%. Futures markets now imply at least one additional 25-basis-point rate hike from the Bank of Canada by year-end.
Gold prices also weakened, weighing on the mining sector: Agnico Eagle fell 2.8%, while Barrick dropped 3.6%. Energy producers surrendered earlier advances as crude prices retreated, with Imperial Oil down 2.0% and Cenovus off 1.8%.
