TSX falls 1% after hotter-than-expected U.S. inflation data, Aritzia jumps

FILE PHOTO: A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. REUTERS/Mark Blinch/File Photo

By Purvi Agarwal and Amruta Khandekar

(Reuters) – Canada’s main stock index fell on Thursday after hotter-than-expected U.S. inflation data tempered expectations of an early rate cut, while Aritzia shares jumped after upbeat quarterly results.

At 10:16 a.m. ET (1516 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 211.55 points, or 1.01%, at 20,777.87.

Across the border, the main Wall Street indexes were also in the red after data showed U.S. consumer prices increased more than expected in December, casting doubts on the likelihood of a rate cut by the Federal Reserve in March.

“Most people are in agreement that this slightly warmer inflation data is going to limit the Federal Reserve in terms of rate cuts,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.

“They’re obviously not going to cut as soon as people would like, and it’s quite possible they’re not going to cut as many times.”

Heavily weighted financials slipped 1.4%.

Shares of Canadian fashion company Aritzia soared 19.2%, making it the top gainer on the index, after its third-quarter results beat analysts’ estimates. The stock outperformed the broader consumer discretionary sector, which dropped 0.9%.

Healthcare was the top sectoral decliner on the TSX, slipping 2.0%, followed by utilities that fell 1.9%.

Information technology stocks, which had outperformed other sectors earlier this week, fell 0.8%. The index rallied to an over two-year high earlier in the session.

Investors are also awaiting results from major U.S. banks that will kick off the fourth-quarter earnings season on Friday.

In other company news, Canadian forestry firm Interfor Corp slipped over 7% after brokerage TD Securities downgraded the stock to “hold” from “buy”.

(Reporting by Purvi Agarwal and Amruta Khandekar in Bengaluru; Editing by Tasim Zahid)