FILE PHOTO: A Bay Street sign, the main street in the financial district is seen in Toronto, January 28, 2013. REUTERS/Mark Blinch/File Photo
January 7, 2022
By Fergal Smith
TORONTO (Reuters) – Canada’s main stock index closed slightly higher on Friday but was still down for the first week of the year as the potential for faster-than-expected U.S. interest rate hikes weighed on investor sentiment.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 12.25 points, or 0.06%, at 21,084.45 on Friday. For the week, it was down 0.65% after the Federal Reserve on Wednesday struck a hawkish note in minutes from its latest meeting.
“The story is still tied to the Fed and rising interest rates coming sooner than expected,” said Sadiq Adatia, chief investment officer at BMO Asset Management.
Wall Street extended its weekly decline as investors remained worried about the U.S. interest rate outlook even after a weaker-than-expected December payrolls report.
Domestic data showed the Canadian economy adding twice as many jobs as expected in December, supporting expectations for the Bank of Canada to begin hiking rates in the coming months.
“What you have been seeing is a bit of rotation going on … the high-flying tech names have been selling off,” Adatia said.
Higher interest rates reduce the value to investors of the future cash flows that technology and other high growth sectors are expected to produce.
The Toronto market’s technology group fell for a fifth straight session, down 1.4%, but that was offset by gains for the heavily weighted financials group and energy stocks.
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