Salem Radio Network News Tuesday, March 28, 2023

Business

TSX falls to 2-month low as contagion fear hits bank stocks

By Fergal Smith

(Reuters) -Canada’s benchmark stock index fell on Friday to its lowest closing level in two months and bank stocks slid after the failure of a high profile U.S. lender in the technology sector spooked investors.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 311.8 points, or 1.55%, at 19,774.92, its lowest closing level since Jan. 5.

For the week, the index was down 3.9%, its biggest weekly decline since September.

Wall Street indexes also fell as California banking regulators said they closed SVB Financial Group to protect deposits in the largest bank failure since the financial crisis.

“It is unclear whether SVB is a self-contained issue or the tip of the iceberg in a larger crisis for the financial sector, said Brandon Michael, senior investment analyst at ABC Funds.

“So when it comes to the banks the narrative is to sell now and ask questions later.”

The potential for additional interest rate hikes by central banks added to pressure on equity markets after the release of U.S. and Canadian employment data.

The Canadian economy beat expectations by adding 21,800 jobs in February, putting pressure on the Bank of Canada to consider another rate hike after saying it wanted end its year-long tightening campaign.

“The data points to a strong labor market and that stresses the need that the BoC may still need to raise interest rates further,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.

Financials, the most heavily-weighted sector on the TSX, fell 2.2%, including declines for the six major bank stocks.

Information technology lost 2.5%, while energy was down 1.3% even as U.S. crude oil futures settled 1.3% higher at $76.68 a barrel.

All ten major sectors ended lower.

Shares of Enghouse Systems tumbled 24.7% after the company’s quarterly earnings missed estimates.

(Reporting by Fergal Smith; Additional reporting by Johann M Cherian in Bengaluru; Editing by Shilpi Majumdar and Deepa Babington)

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