TSX falls as valuation and U.S. rate hike concerns weigh
By Fergal Smith
TORONTO (Reuters) - Canada's main stock index fell on Tuesday as worries about elevated valuations and higher U.S. interest rates offset a rally in oil prices.
The index has rallied 27.5 percent since hitting a three-year low in January, helped by a rebound in commodity prices and low global interest rates. Last week it reached a 13-month high of 14,855.69, raising concerns that the rally might be overdone.
"We would say that the market has become more expensive and that leads us to become more defensive," said Youssef Zohny, portfolio manager at StennerZohny Investment Partners.
The combination of higher valuations and possible interest rate increases may lead to a "correction in equity markets," Zohny added.
Traders raised bets on a Federal Reserve interest rate hike before year-end after New York Fed President William Dudley said an increase in September was possible.
The Toronto Stock Exchange's S&P/TSX composite index closed down 73.58 points, or 0.5 percent, at 14,703.44. Nine of the TSX's main 10 groups were in negative territory.
The heavyweight financials group was the biggest drag on the index. It fell 0.5 percent.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.7 percent. Continued...