TSX ends lower as BoC rate hike spooks investors

By Fergal Smith

(Reuters) -Canada's main stock market fell on Wednesday, including declines for technology and gold mining shares, as the Bank of Canada raised its benchmark interest rate for the first time since January.

The Toronto Stock Exchange's S&P/TSX composite index ended down 71.91 points, or 0.4%, at 19,983.69, pulling back from the previous day's close which was its highest in two weeks.

"Stocks are declining after investors got spooked when the Bank of Canada restarted their rate hiking campaign," Edward Moya, a senior market analyst at OANDA, said in a note.

The Bank of Canada hiked its benchmark interest rate by 25 basis points to a 22-year high of 4.75%, and markets and analysts immediately forecast another increase next month to ratchet down an overheating economy and fight stubbornly high inflation.

"Today's message that more hikes are coming is resetting many peak terminal rate bets," Moya said.

U.S. benchmark the S&P 500 also ended lower. The U.S. Federal Reserve is due to make an interest rate decision next week.

The Toronto market's technology sector fell 3.4%, giving back some recent gains. Higher interest rates are a particular headwind for technology, reducing the value to investors of the future cash flows that companies in that sector are expected to produce.

The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.9% as the price of gold dropped.

Shares of North West Company Inc were a drag on the consumer staples sector, dropping 10.8% after the food retailer reported quarterly profit below analyst estimates. That weighed on the consumer staples sector.

In contrast, industrials advanced 0.6%, while energy was up 1.2% as the price of oil settled 1.1% higher at $72.53 a barrel.

(Reporting by Fergal Smith in Toronto and Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Marguerita Choy and David Gregorio)