Rate Hike Ripples Through TSX: Banks and Energy Stocks Take Center Stage

Following the Federal Reserve's 25-basis-point rate hike, TSX stocks are feeling the effects of higher U.S. interest rates.

The Canadian financial sector is particularly sensitive to rate moves, with banks like Royal Bank of Canada and Toronto-Dominion leading the pack.

Higher Fed rates can put pressure on net interest margins and slow loan growth for banks, but those with robust capital and diversified income streams are better equipped to handle the shock.

Among energy stocks, Suncor Energy Inc. has been upgraded due to its 11% free cash flow yield and refining margin exposure.