The Toronto Stock Exchange was hit by a surge in sales on Thursday as more central banks around the world raised their interest rates as a sign of how disastrous the high inflation spectrum has become. .
The benchmark Canadian stock index fell to 600 points or nearly three per cent at one point, falling below 19,000 points for the first time since April 2021.
The TSX has fallen 13 percent since April, as more and more data suggests that central bank rate hikes have not been close enough to dominate the beast of inflation and more aggressive moves are needed.
The U.S. Federal Reserve on Wednesday raised its interest rate, which is trending by 75 basis points, its biggest upward move in 26 years.
The Swiss National Bank and the Bank of England continued the same Thursday, raising their lending rates in an attempt to cool overheated economies.
“Monetary policy makers are generally catching up with inflation with rate hikes, but the extent to which inflation is more deeply rooted and driven by structural rather than cyclical factors remains questionable,” he said. Bloomberg Intelligence analyst Gina Martin Adams in a note to clients.
A large walk in Canada is expected
After rising three times this year to raise its rate from 0.25 per cent so recently in March to 1.5 per cent now, investors expect the Bank of Canada to announce a very large rate hike on next month, bringing its rate to 2.25. percent, a level not seen since before the 2009 financial crisis.
Stubborn inflation has caused a chill in stock markets recently as investors realize that persistently higher prices will be a brake on profits as consumers are forced to find ways to cut them.
“Can the economy accept it? So far, leading indicators show good reads, but we are still wary of a consumer strike,” said Giuseppe Sette, president of the quantitative research firm Toggle.
The TSX’s 11 subscripts were lower, from energy to banking, and health care to technology.
Things were even worse on Wall Street, where the Dow Jones Industrial Average lost 700 points or more by three percent to fall below the 30,000 level for the first time since January 2021.
The broader S&P 500 and technology-focused Nasdaq have officially entered bearish markets, meaning they have fallen 20% or more since the peak.