Fed fears drive TSX to biggest drop in eight weeks

Mon Aug 19, 2013 4:42pm EDT
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By John Tilak

TORONTO (Reuters) - Canada's main stock index recorded its biggest single-day percentage fall in eight weeks on Monday as concerns about the U.S. Federal Reserve's exit strategy for its stimulus program hit energy and financial shares.

The Toronto market gave up much of the gains it made in the previous week, with every major sector on the index ending in the red.

Rising expectations that the wind-down of the Fed's bond buying program is imminent created more uncertainty in the market, with investors hoping the release on Wednesday of minutes from the Fed's last policy meeting would shed light on the U.S. central bank's intentions.

"Investors are taking some of the profits off the table and want see what shakes out once the Fed begins tapering," said Elvis Picardo, strategist and vice president of research at Global Securities in Vancouver.

"You could very well see a knee-jerk reaction when news first comes out about the exact timing of the tapering," he added.

The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 148.86 points, or 1.17 percent, at 12,588.06, its biggest decline since June 24.

"It looks like we're into shaky waters," said Victor Kuntzevitsky, an associate at Northland Wealth Management.

"I do expect more volatility," he added. "Because of the overhang, investors are not sure where to put the money."   Continued...

A Toronto Stock Exchange (TSX) logo is seen in Toronto November 9, 2007. REUTERS/Mark Blinch