TSX posts biggest decline in six weeks on hawkish Fed

·1-min read
The facade of the original Toronto Stock Exchange building is seen in Toronto

By Fergal Smith

TORONTO (Reuters) - Canada's main stock index fell on Friday by the most since mid-July, echoing weak sentiment on Wall Street, after Federal Reserve Chair Jerome Powell said U.S. monetary policy will need to be tight "for some time" before inflation is under control.

The Toronto Stock Exchange's S&P/TSX composite index ended down 299.05 points, or 1.5%, at 19,873.29, its biggest decline since July 14 and its lowest closing level since Aug. 9.

For the week, the index was down 1.2%, its second straight weekly decline.

Losses on Wall Street were even steeper after Powell's remarks dashed investors' hopes that the Fed's aggressive approach to hiking interest rates might be modified soon.

"It's probably a touch more hawkish than some had expected," said Greg Taylor, a portfolio manager at Purpose Investments.

The healthcare and technology sectors led broadbased declines, down 5.1% and 4.4% respectively, as the prospect of continued rate increases hurt high-growth stocks.

Also weighing on the tech sector was a 13.7% tumble in the shares of OpenText after the software company agreed to buy British enterprise software maker Micro Focus. The all-cash deal valued Micro Focus at $6 billion including debt.

Heavily-weighted financials ended nearly 1% lower to close out a week that featured mixed quarterly results from some of Canada's major banks.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 2.5% as gold prices fell.

(Additional reporting by Aniruddha Ghosh and Sruthi Shankar in Bengaluru; Editing by Krishna Chandra Eluri, Maju Samuel and Richard Chang)