TORONTO (Reuters) - Canada’s main stock index fell on Thursday as weaker commodity prices following Wednesday’s U.S. Federal Reserve rate hike weighed on energy and mining stocks, while a wireless acquisition dragged telecom stocks lower.
Consideration that Fed members have penciled in 100 basis points of hikes for next year caused a “backlash,” according to Sadiq Adatia, chief investment officer at Sun Life Global Investments.
The market rallied on Wednesday after the Fed raised interest rates for the first time in more than nine years, removing uncertainty as to when the first hike was going to happen.
The materials group fell 3.7 percent as Fed tightening weighed on metal prices.
Barrick Gold Corp ABX.TO fell nearly 8 percent to C$9.69, while Goldcorp Inc G.TO was down 6.6 percent at C$15.26.
Gold futures GCc1 fell 2.5 percent to $1,051.90 an ounce. [GOL/] and copper prices CMCU3 declined 1.4 percent to $4,545 a tonne. [MET/L]
The telecom sector fell 3.2 percent after Shaw Communications Inc SJRb.TO said it planned to jump into wireless with a C$1.6 billion bid for recent entrant Wind Mobile.
Shaw fell 7.7 percent to C$24.90 as investors fretted about how it would finance the deal, while its main rival in Western Canada, Telus Corp T.TO, lost 6.7 percent to C$37.92 on an expectation of intensified wireless competition.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE settled down 156.15 points, or 1.19 percent, at 13,009.93, with seven of the index’s 10 main groups in negative territory.
Energy stocks fell 0.9 percent as oil prices approached multiyear lows. [O/R]
TransCanada Corp TRP.TO fell 3.3 percent to C$46.56. The company increased the estimated cost of its Energy East crude oil pipeline by 30 percent to C$15.7 billion as it filed an amendment to its application with Canadian regulators.
There is scope for bargain hunting in the energy sector, according to Sun Life’s Adatia, but “we want to play that longer term and be patient.”
U.S. crude CLc1 prices settled at $34.95 a barrel, down 1.60 percent, while Brent crude LCOc1 lost 1.3 percent to $36.90.[O/R]
Financials fell 0.4 percent.
Among the gainers, Canadian National Railway Co CNR.TO rose 1.1 percent to C$77.61, while Fairfax Financial Holdings Ltd FFH.TO was up 2.7 percent at C$646.89.
Additional reporting by Alastair Sharp; Editing by Will Dunham and Lisa Shumaker