TSX posts biggest weekly loss since March on interest rate jitters

Aug 18 (Reuters) – Canada’s main stock index ended slightly higher on Friday as energy shares rallied, but the market still posted its biggest weekly decline since March amid concern that a prolonged period of high interest rates could crimp company valuations.

The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) ended up 6.16 points at 19,818.39. For the week, the index was down 2.9%.

Wall Street’s main indexes were also pressured this week as long-term borrowing costs jumped, with investors no longer expecting the Federal Reserve to quickly pivot to cutting interest rates.

“We are now going to be likely in an area where we may shift from talking about rate increases to the duration of how long rates are going to remain high,” said Mike Archibald, vice president, portfolio manager at AGF Investments.

“Higher interest rates put downward pressure on equity valuations and price earnings multiples. I think a lot of what’s happening this week is the valuations, which have gone up quite a bit so far in 2023, are just are correcting a little bit,” Archibald said.

The Toronto market’s heavily-weighted financials sector fell 0.4% on Friday and consumer staples was down 0.5%.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.2%, as the price of gold was unable to rebound above $1,900 per ounce.

“The global bond market selloff has sent gold prices sharply lower over the past month,” Edward Moya, a senior market analyst at OANDA, said in a note.

In contrast, energy rallied 1% as U.S. oil futures settled 1.1% higher at $81.25 a barrel. Utilities was another bright spot, adding 0.8%.

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