Stocks Take it on Chin

Inflation Data Released in Canada

Equities in Canada dropped sharply at the open on Tuesday, dragged down by losses in material stocks, while a slower-than-expected rise in August inflation did little to ease rate hike jitters.

The TSX Composite erased Monday’s gains and then some, retreating 230.6 points to open Tuesday at 19,331.78.

The Canadian dollar doffed 0.53 cents to 74.98 cents.

Gold stocks took the brunt of investors’ wrath, most notably, B2Gold, down 22 cents, or 4.9%, to $4.26, while Wesdome Gold Mines tumbled 27 cents, or 3.2%, to $8.27.

On the economic slate, Statistics Canada said its consumer price index rose 7.0% on a year-over-year basis in August, down from a 7.6% gain in July.

On a seasonally adjusted monthly basis, the CPI rose 0.1% in August.

Inflation numbers could influence traders' expectations around interest rate hikes by the Bank of Canada (BoC) ahead of a policy meeting next week.

Money market traders have fully priced in a 50-basis-point rate hike by the BoC. The central bank has already raised rates by 300 basis points in just six months to 3.25%, a 14-year high.

ON BAYSTREET

The TSX Venture Exchange cratered 6.34 points, or 1%, to 619.58.

All 12 TSX subgroups without exception were negative, with gold staggering 3%, materials wilting 2.3%, and real-estate stepping back 2%.


ON WALLSTREET

Stocks slid on Tuesday as the Federal Reserve kicked off its two-day policy meeting and Wall Street looked ahead to another large rate hike due out Wednesday.

The Dow Jones Industrials stumbled 378.53 points to begin the day’s trading at 30,641.15.

The S&P 500 removed 46.1 points, or 1.2%, to 3,853.53.

The NASDAQ Composite let go of 101.4 points to 11,433.62.

Meanwhile, Ford shares slumped 9% after it announced that supply chain issues would cost the automaker an extra $1 billion in the third quarter.

The Federal Open Markets Committee begins its September meeting on Tuesday, where central bankers are expected to announce a 0.75 percentage point rate hike on Wednesday.

Stocks have tumbled in recent weeks as comments from Fed Chair Jerome Powell and an unexpectedly hot August consumer price index report caused traders to prepare for even higher rates until inflation cools.

Housing market data released Tuesday showed an unexpected jump in starts for August, although building permits saw the biggest decline since April 2020.

Stock wavered between gains and losses throughout the session, with the 30-stock index down as much as 263 points earlier in the day. At session lows, the S&P 500 and NASDAQ shed more than 0.9% each.

Investors are focused on the Fed’s latest policy meeting slated to begin Tuesday. The central bank is expected to raise interest rates by another three-quarters of a point, though investors are also watching for guidance about corporate earnings before the next reporting season begins in October.

Beyond the Fed meeting, there are just a few economic data releases on deck this week, including August housing starts on Tuesday and initial jobless claims on Thursday.

Treasury prices lost sharply, raising yields to 3.58% from Friday’s 3.49%. Treasury prices and yields move in opposite direction.

Oil prices staggered $2.21 to $83.52 U.S. a barrel.

Gold prices dipped $4.60 to $1,673.60 U.S. an ounce.