Canada’s main stock index fell to a near four-week low on Wednesday as Bank of Montreal reported disappointing results and investors worried borrowing costs would remain elevated for longer than previously expected, slowing economic growth.
The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE), opens new tab ended down 367.07 points, or 1.65%, at 21,897.98, its lowest closing level since May 2 and its biggest decline since Feb. 13.
U.S. stocks also fell as Treasury yields climbed on concern over the timing and scale of possible interest rate cuts from the Federal Reserve.
“With rates staying higher that brings along the possibility of a slowing economy,” Michael Sprung, president at Sprung Investment Management. “We could possibly be in for a rough ride over the next number of months.”
All ten major sectors on the Toronto market lost ground, including a decline of 2.39% for heavily-weighted financials (.SPTTFS), opens new tab.
Bank of Montreal (BMO.TO), opens new tab reported weaker-than-expected quarterly profit, hurt by higher loan loss provisions. Its shares ended down 8.86%.
“The banks seem to be taking larger-than-expected provisions for bad loans,” Sprung said. “From their point of view, they’re being cautious, from the investors’ point of view, it looks like the banks think it’s going to be worse than we had hoped.”
The materials sector (.GSPTTMT), opens new tab, which includes miners and fertilizer companies, lost 2.15% as gold and copper prices fell.
The price of oil also decreased, settling 0.8% lower at $79.23 a barrel. That weighed on energy, with the sector ending down 1.73%.
The utilities group (.GSPTTUT), opens new tab, which includes many high-dividend paying stocks that could particularly benefit from interest rate cuts, was down 2.34%.
National Bank of Canada (NA.TO), opens new tab was a bright spot. Its shares gained 2.55% after the lender reported a rise in second-quarter net profit, helped by strong performance in its wealth management and financial markets units.
