FX.co ★ Canadian Market Down Sharply As Hotter-than-expected U.S. Inflation Data Weighs

The Canadian stock market has seen a significant drop this Tuesday, highlighted by investor pessimism following the announcement of an unexpected surge in U.S consumer price inflation that dimmed prospects of an interest rate cut by the Federal Reserve in March.

Across the board, stocks are experiencing a downturn. All industry indexes are in negative territory, with the technology and materials shares suffering the most noticeable setbacks. Other sectors that are also facing losses include consumer discretionary, real estate, utilities, communications, and financial firms.

Around an hour past noon, the main S&P/TSX Composite Index was down by 417.49 points or 1.98%, standing at 20,649.81.

The Information Technology Capped Index dropped by 4.1%. Among its constituents, Shopify Inc experienced a significant dip of 11.5%, while Dye & Durham, Computer Modelling, Hut 8 Corp, Open Text Corp, Lightspeed Commerce, Enghouse Systems, and BlackBerry saw their shares drop between 2 to 3.1%.

In the materials sector, the index fell by 3.3%. Ssr Mining Inc posted a substantial loss of 57%. Meanwhile, Sandstorm Gold's shares dropped by 10.6%, and Centerra Gold's shares were 9% lower. Eldorado Gold, Lithium Americas Corp, Silvercrest Metals, Ero Copper, First Majestic Silver, and Fortuna Silver Mines all saw their shares slide between 6 to 8%.

Companies in the consumer discretionary sector, such as Brp Inc, Spin Master Corp, Canada Goose Holdings, Restaurant Brands International, Mty Food Group, and Aritzia Inc, faced decreases of 2 to 4%.

According to the Labor Department, its consumer price index increased 0.3% in January after a slight rise of 0.2% in December. This is contrary to the economists' anticipation of consumer prices growing by just 0.2%.

While the annual pace of consumer price growth decelerated to 3.1% in January from 3.4% in December, economists projected the growth rate to slow to only 2.9%.

The recently announced data, alongside the Federal Reserve's officials necessitating greater assurance of inflation slowdown before reducing interest rates, has further tempered hopes for an imminent interest rate cut.