TORONTO (Reuters) - Canada’s main stock index dropped over 1.5 percent on Wednesday after the Federal Reserve’s comments about the U.S. economic recovery signaled to investors that the central bank was likely to raise interest rates as planned later this year.
The Fed said it will remain “patient” in deciding when to raise interest rates, and added U.S. economic growth was on track.
A further decline in oil prices amid concerns about a buildup in U.S. crude inventories hit shares of energy producers. U.S. oil prices shed more than 4 percent, and shares of oil and gas producers were 4.9 percent lower. [O/R]
The market in recent days has had to process uncertainty over Greece’s election results as well as sluggish economic data from China and the United States.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 231 points or 1.56 percent, at 14,602.88. Nine of the 10 main sectors on the index were in the red.
The benchmark TSX declined for the first time in six sessions, but the index has struggled in recent months as choppy commodity prices have turned investors away.
“What you want to own in Canada is too expensive and everything else is scary,” said Wendell Perkins, senior portfolio manager who helps manage about $1 billion in assets at Manulife Asset Management.
He said he is underweight on Canadian equities because of high valuations in some sectors and uncertainty surrounding commodity prices.
“The market is not cheap. If you look at what you have to pay to be here, given the macro headwinds, there are more interesting places to be,” said Perkins, who is also more heavily invested in Europe and Japan.
In corporate news, AGF Management Ltd (AGFb.TO) posted fourth-quarter earnings and revenue that missed expectations. Shares of the fund manager fell 1.3 percent to C$7.12.
Editing by Peter Galloway and G Crosse