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Toronto market gives back some recent gains as tech weighs

Randy Mancini 7 Aug 9

By Fergal Smith

(Reuters) – Canada’s main stock index fell on Tuesday, with technology shares leading the move lower ahead of U.S. inflation data expected to set the tone for additional Federal Reserve interest rate increases.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 90.87 points, or 0.5%, at 19,578.30, after four straight days of gains.

“We’re seeing a little bit of weakness from the U.S. side as investors await the CPI reading,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.

“The CPI will be the determining factor, whether another 75 basis points hike is needed in September, or if the Fed can pivot to tightening at a slower pace.”

The Fed hiked rates by a hefty three quarters of a percentage point in both June and July, with traders seeing about a two-thirds chance of another three-quarter-percentage-point hike next month.

Wall Street also closed down after a dismal forecast from Micron Technology pulled chip makers and tech stocks lower.

The Toronto market’s technology sector lost 4.1%, with shares of Nuvei Corp tumbling 21.4% after the company reported quarterly earnings that missed analysts’ estimates.

Healthcare dropped 7.9%, pressured by declines for cannabis shares. Cronos Group Inc ended 13.9% lower as its quarterly revenue fell short of estimates and it flagged higher costs.

Resource shares helped limit the TSX’s decline. The energy sector rose 0.6% despite a dip in oil prices and the materials group, which includes precious and base metals miners and fertiliser companies, added 0.5%.

(Reporting by Fergal Smith; Additional reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Deepa Babington)

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