Stocks fall from record levels; insurers’ stocks lose ground

Canadian stocks fell from record values, Bloomberg’s news agency reported April 4, as expectations of higher interest rates undercut financial companies such as the Royal Bank of Canada and reduced the value of a guage of insurers’ stocks.
“Concern the Bank of Canada will continue raising borrowing costs this year weighed on the Standard & Poor’s/TSX Composite Index, which last week completed its best first quarter in six years, and pushed Canadian bond yields higher,” Bloomberg’s reported.
“We might be in for a pause after the recent gains,” Doug Davis, president of Davis-Rea Ltd. Investment (which manages CD$430 million in Toronto), told Bloomberg’s. “We’re waiting to see when rising interest rates have an impact.”
The S&P/TSX slipped 0.3% as of 3:47 p.m. in Toronto on April 4. The index closed April 3 at a record 12,210.86. It’s up 8.1% this year, largely due to gains for oil and materials stocks.
As reported in Bloomberg’s, the two-year Canadian bond yield reached 4.047%, the highest since 4.196% in June 2002. It was most recently up 4 basis points to 4.06%. A basis point is 0.01 percentage point.
A gauge of bank and insurance stocks slid 0.3% and was the biggest contributor among 10 industry groups to the S&P/TSX’s decline.
Royal Bank, the country’s largest lender, fell 50 cents to CD$48.87. Toronto-Dominion Bank, the country’s second-highest lender, lost 25 cents to CD$64.60. Higher bond yields increase borrowing costs for companies and reduce the value of bonds held by banks and insurers.