Canada’s main stock index endured a sharp decline on Wednesday after the central bank raised rates by a full percentage point and lifted its inflation forecast. Weakness in the financials, industrials, and materials sectors dragged the TSX even further. The Bank of Canada hiked its rate 100 basis points, the largest single hike since August 1998. The central bank expects to raise rates further.
Wall Street’s main indexes also sunk after hotter-than-expected inflation data validated fears that the Federal Reserve would aggressively hike interest rates to settle surging prices.
The Labor Department’s report showed the Consumer Price Index rose in June on both a monthly and annual basis by 1.3 per cent and 9.1 per cent, respectively. This is well above the expected increases of 1.1 per cent and 8.8 per cent.
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The Canadian dollar traded for 77.07 cents US compared to 76.76 cents US on Tuesday.
US crude futures traded 0.11 per cent higher at $95.95 a barrel, while the Brent contract lost 0.19 per cent to $99.30 a barrel.
The price of gold was up US$4.64 US to $1,737.96.
In world markets, the Nikkei was up 142.11 points to 26,478.77 the Hang Seng was down 46.79 points to 20,797.95, the FTSE was down 53.49 points to 7,156.37, and the DAX was down 149.16 points to 12,756.32.
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