Energy, Materials Stocks Dragging Down Canadian Market; BoC Cuts Rate By 50 Bps

(RTTNews) - Despite the Bank of Canada's big 50-basis point interest rate cut, the Canadian market is languishing in negative territory on Wednesday after a weak start, with stocks from energy and materials sectors reeling under selling pressure due to declining commodity prices.

Shares from utilities, technology and healthcare sectors are among the other notable losers.

The benchmark S&P/TSX Composite Index is down 126.56 points or 0.52% at 24,590.14 a few minutes before noon.

The Canadian central bank cut rates by a half point today, as widely expected, reducing its target for the overnight rate by 50 basis points to 3.75%, with the Bank Rate at 4% and the deposit rate at 3.75%.

The Canadian central bank's decision to continue lowering rates came as consumer price inflation has declined significantly from 2.7% in June to 1.6% in September.

"With inflation now back around the 2% target, Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range," the bank said its statement.

The central bank also said it expects to further reduce rates if the economy evolves broadly in line with its forecast but noted the timing and pace of future rate cuts will be guided by incoming information and its implications for the inflation outlook.

"We will take decisions one meeting at a time," Bank of Canada said, stressing that it is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.

The Energy Capped Index is down 1.51%. Birchcliff Energy (BIR.TO), Baytex Energy (BTE.TO), MEG Energy (MEG.TO), Prairiesky Royalty (PSK.TO), Ces Energy Solutions (CEU.TO), Paramount Resources (POU.TO), Vermilion Energy (VET.TO), Suncor Energy (SU.TO), International Petroleum Corporation (IPCO.TO) and Cenovus Energy (CVE.TO) are down 1.4 to 2.7%.

Whitecap Resources (WCP.TO) is down by about 1.4%. The company reported third-quarter net profit of $274.2 million, or $0.46 per share, compared with $152.7 million, or $0.25 per share in the year-ago quarter.

The Materials Capped Index is down 1.33%. Seabridge Gold Inc (SEA.TO) is down 6% and Capstone Mining Corp (CS.TO) is declining 4.3%. Ivanhoe Mines (IVN.TO), Novagold (NG.TO), Fortuna Silver Mines (FVI.TO), Aya Gold & Silver (AYA.TO), First Majestic Silver Corp (AG.TO), Sivercrest Metals (SIL.TO) and Hudbay Minerals (HBM.TO) are down 2.5 to 4%.

Teck Resources (TECK.B.TO), Ssr Mining (SSRM.TO), Pan American Silver Corp (PAAS.TO), Eldorado Gold (ELD.TO) and MAG Silver (MAG.TO) are also notably lower.