June 12 (Reuters) – Canada’s resource-heavy main index fell on Monday, dragged down by energy and material stocks, while investors awaited the U.S. Federal Reserve’s interest rate decision due later in the week.
At 9:47 a.m. ET (1347 GMT), the Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) was down 40.18 points, or 0.2%, at 19,851.88.
Economists and traders widely expect the U.S. central bank to halt its market-punishing rate hikes for the first time in over a year at its June meeting on Wednesday. However, most banks expect the Fed to prepare markets for a hike in July.
After the Bank of Canada and the Reserve Bank of Australia surprised markets with rate hikes last week, investors are cautiously waiting for the U.S. inflation data on Tuesday to gauge the Fed’s appetite for further rate hikes.
“Policymakers are likely going to leave rates unchanged as they’ve done a lot over the past year and are now taking a little more patient approach to see how the 500 basis points of rate hikes impact the (U.S.) economy,” said Angelo Kourkafas, investment strategist at Edward Jones.
“But at the same time, they’re going to make clear that a pause or a skip in that meeting doesn’t mean that they are done.”
Energy stocks (.SPTTEN) and materials (.GSPTTMT) fell 1.4% and 0.5%, respectively, as oil and copper prices dropped amid concerns about poor demand from top commodities consumer China.
Energy and materials command a weightage of 18.9% and 11.8%, respectively, on the benchmark TSX.
Among individual movers, Methanex Corp (MX.TO) slid 7.7% to a more than five-month low after Scotiabank downgraded the methanol supplier to “sector perform” from “sector outperform” and trimmed its price target on the stock.
Reporting by Ankika Biswas in Bengaluru; Editing by Shilpi Majumdar
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