Major North American indices fell after the Federal Reserve said it will raise interest rates this year more times than initially expected.
The Toronto Stock Exchange’s S&P/TSX composite index fell 23.16 points to 16,265.82.
In New York, the Dow Jones industrial average shed 119.53 points to 25,201.20. The S&P 500 index retreated by 11.22 points to 2,775.63 and the Nasdaq composite index lost 8.09 points to 7,695.70.
The fall came after the Federal Reserve issued a statement saying it was raising its benchmark interest rate 25 basis points to two per cent — the second rate hike this year.
The Fed also announced it would raise rates another two times this year, bringing the 2018 total to four when many investors expected three.
“There’s going to be a lot more pressure on the Canadians right now if we’re seeing four rate hikes from the States to do at least one … if not two this year,” said Michael Currie, vice-president and advisor at TD Wealth.
The Bank of Canada is expected to raise rates in July, said Currie, but now the likelihood that it will do so again before the end of 2018 has gone up. The Bank of Canada will have three more interest rate announcements after July 11.
Foreign investors look for the best rates in stable countries for their money, he said, and often choose between Canada and the U.S.
People moving their money out of Canada into the States, he said, pushes down the loonie.
“The best way to defend the dollar is to keep raising rates.”
The Canadian dollar averaged 76.99 cents US, up 0.09 of a US cent.
The July crude contract gained 28 cents to US$66.64 per barrel and the July natural gas contract advanced about two cents to US$2.96 per mmBTU.
The August gold contract rose US$1.90 to US$1,301.30 an ounce and the July copper contract moved up about a penny to US$3.25 a pound.
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