Following recent data showcasing a higher than anticipated rise in U.S. consumer price inflation, the Canadian market experienced a significant downturn. This hampered the chance of the Federal Reserve decreasing rates in the near term. On Tuesday, sustained selling pressure led to a severe decrease in share prices.
In response to the widespread selling, all sectoral indices ended negatively. Major losses were seen in technology, materials, consumer discretionary, utilities, financials, and energy stocks. The S&P/TSX Composite Index, a significant market metric, dropped to 20,466.50, finishing with a 482.33 point loss, which translates to 2.29%.
Indices depicting the status of various sectors also suffered. The Information Technology Capped Index fell by 4.59%, while the Materials Index dropped by 3.35%. The Consumer Discretionary Index and the Utilities Index recorded a decrease of 2.37% and 2.3% respectively. Additionally, the Healthcare, Communication Services, Energy, Financials, and Real Estate indices underwent declines ranging from 1.5 to 2.1%.
Specific companies also faced stark losses. SSR Mining Inc. fell by 53.5%, subsequent to its announcement of suspending operations at its Çöpler mine. Following a Q1 growth rate prediction lower than anticipated, Shopify Inc's shares also saw a reduction of 12.5%. Other companies such as BRP Inc, Precision Drilling Corporation, Restaurant Brands International, Cargojet, and goeasy saw a loss ranging from 3.2 to 4.5%. Bank of Montreal, Royal Bank of Canada, WSP Global Inc, George Weston, and Constellation Software recorded a decrease of 1.6 to 2.5%.
However, a few firms such as Softchoice Corporation and Waste Connections witnessed growth, of 5.6% and 2.3% respectively, in contrast to the prevalent weak trend.
The Labor Department released data showing a 0.3% rise in the consumer price index in January, higher than the 0.2% expectation. Additionally, the annual consumer price growth rate slowed to 3.1% in January from 3.4% in December, again deviating from the expected 2.9%. When excluding food and energy prices, core consumer prices increased by 0.4% in January, higher than the 0.3% rise in December.
Given these figures and the Federal Reserve’s stated requirement for more "confidence" that inflation is slowing before committing to lower interest rates, optimism about an upcoming rate cut has further diminished.
