TSX pares weekly gain as investors brace for further rate hikes

Canada’s main stock index fell on Friday, including declines for financials and technology, as investors weighed U.S. and Canadian jobs data that could help determine the pace of central bank interest rate hikes.

The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) ended down 39.79 points, or 0.2%, at 20,485.66, after posting on Thursday its highest closing level in nearly six months.

For the week, the TSX was up 0.5%.

U.S. stocks fell, although recovering from their lowest levels, as the November payrolls report fueled expectations the Federal Reserve would maintain its path of interest rate hikes.

Canada added 10,100 jobs in November, broadly in line with forecasts, while the jobless rate fell to 5.1%.

Money markets expect the Bank of Canada to raise interest rates by 25 basis points when it makes a policy decision on Wednesday, with a roughly 25% chance of a larger move.

“We’re still in a mood where the market looks at good news as bad, because the data still shows that the Bank of Canada can still be aggressive,” said Greg Taylor, a portfolio manager at Purpose Investments.

This week was a cocktail of economic data iced with mixed bank earnings, as markets enter into the holiday season.

Canadian Imperial Bank of Commerce (CIBC) (CM.TO) fell 0.7%, extending its decline from the previous day when it reported quarterly results that missed estimates.

The lender said it would appeal a New York court’s ruling in a lawsuit brought against the bank by an entity of U.S. private equity firm Cerberus Capital Management.

The heavily weighted financials sector fell 0.4%, while technology gave back some of its recent gains, ending 0.8% lower.

Helping to cap losses for the index was a gain of 4.9% for the healthcare sector, as shares of cannabis producers climbed.