Canada’s stock market saw a sharp decline on Wednesday, with the Toronto Stock Exchange’s S&P/TSX composite index dropping 562.71 points, or 2.2%, to close at 24,557.00. This marked its lowest closing level since November 5. The slump was driven by broad-based losses, particularly in the technology sector, following the U.S. Federal Reserve’s announcement of a slower pace of interest rate cuts.
U.S. stocks also experienced significant declines as the Federal Reserve reduced its key interest rate by 0.25%, in line with market expectations, but signaled a more cautious approach for 2025, forecasting only two rate cuts instead of the previously anticipated four. The Fed’s decision led to a spike in bond yields, with Canada’s 10-year yield rising by 8.2 basis points to 3.224%, reflecting the trend in U.S. Treasuries.
Michael Sprung, president of Sprung Investment Management, noted the sudden rise in 2- and 10-year bond rates, suggesting that the market is increasingly concerned about potential inflation, a concern that the Fed may not yet fully recognize.
The technology sector bore the brunt of the losses, with Shopify Inc. plummeting 7.3%. The materials sector, which includes mining and fertilizer stocks, also took a hit, falling 3.5% as both gold and copper prices declined. The energy sector ended 1.9% lower, despite oil prices gaining 0.7% to settle at $70.58 per barrel.
Canada’s financial sector also struggled, with major banks and other financial stocks dropping by 2%. This broad sell-off marked the largest one-day decline for the Canadian market in 10 months.
