TSX dips as banks, energy and Fed uncertainty weigh
By Leah Schnurr
OTTAWA (Reuters) - Canada's main stock index lost ground on Friday as heavyweight banks, energy and mining stocks all weighed amid lower oil prices and uncertainty about when the Federal Reserve might raise U.S. interest rates.
Investors also dumped shares of banks in North America and Europe after the U.S. Department of Justice told Deutsche Bank (DBKGn.DE: Quote) to pay $14 billion to settle an investigation into its selling of mortgage-backed securities, a far bigger bill than expected.
On Bay Street, the financials group .SPTTFS slipped 0.5 percent, with Royal Bank of Canada (RY.TO: Quote) off 0.7 percent to C$80.76.
While trading in bank shares in Canada has been choppy in the past week, the sector rose in the past two sessions, including a 1 percent gain on Thursday. Banks are up nearly 11 percent so far this year.
Uncertainty over whether the U.S. Federal Reserve will raise rates by the end of the year also weighed on banking shares and the broader equity market, said Bryden Teich, portfolio manager at Avenue Investment Management.
"The North American financials are more playing in the arena of what is the Fed going to do and what impact does it have on their businesses," said Teich.
A number of Fed officials have recently suggested the central bank could raise soon, though a speech earlier this week from Fed Governor Lael Brainard solidified the view that a hike will not come in September.
A recent Reuters poll showed that the odds of the Fed raising rates in December have shot up in the past month. [ECILT/US] Continued...