Canada’s main stock index lagged on Tuesday, as materials and technology stocks declined on the back of weak services sector data from China, while investors braced for the Bank of Canada’s(BoC) interest rate decision this week.
At 10:00 a.m. ET (1400 GMT), the Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) was down 44.41 points, or 0.22%, at 20,500.95.
Global stock markets fell after data showed China’s services activity expanded at its slowest pace in eight months in August, even as weak demand continued to dog the world’s second-largest economy and government stimulus failed to revive consumption meaningfully.
Materials sector (.GSPTTMT), which includes miners and fertilizer companies, lost 0.8% as prices of base and precious metals slipped on weak China data and a stronger dollar.
Rate sensitive technology stocks (.SPTTTK) led sectoral declines, falling over 1% while yields slipped. Canadian government 10-year bond yield fell 0.9%.
Market participants are keenly watching the BoC’s interest rate decision on Wednesday, when the central bank is expected to hold its key interest rate steady at 5.00%, according to a majority of economists in a Reuters poll.
“Recent data tells us that the Canadian economy is kind of stalled. The BoC would be on the side of caution, and they are definitely on pause for the upcoming rate decision tomorrow,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.