North American stock markets sank midweek as the hottest U.S. inflation numbers in more than 30 years had investors worrying that central banks will speed up interest rate hikes.
The S&P/TSX composite index closed down 132.59 points from its record close to end the day at 21,461.93.
“The concern is that central banks speed up the taper, which then will lead to raising interest rates, and the risk is that they raise interest rates too quickly and cause a policy misstep in their efforts to tackle higher inflation,” said Craig Jerusalim, portfolio manager at CIBC Asset Management. Although central banks have described inflation as temporary, the high numbers raised concerns that the situation will last longer and that Canada's inflation number next week will also be elevated.
The sector lost 3.1 per cent with Hut 8 Mining Corp. down 8.2 per cent, BlackBerry Ltd. off 5.8 per cent and Shopify Inc. 4.8 per cent lower. A stronger U.S. dollar stemming from the inflation numbers and the potential for rising interest rates put pressure on commodity prices except for gold, said Jerusalim.
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