TSX Falls 0.4% Amid Higher Borrowing Costs and Tightened Dollar Funding

The TSX fell by 0.4% after Fed Chair Kevin Warsh signaled that the central bank still has 'more work to do' to reach an inflation rate of 2%. This indicates a higher likelihood of a September US interest rate hike, which tends to raise global borrowing costs and tighten dollar funding.

Canada's economy posted 3.3% annualized growth in the second quarter, but a July advance estimate showed flat growth, and fresh US tariffs are seen as another potential drag on the economy. As a result, many expect the Bank of Canada to hold off on any rate changes this month.

The TSX was also affected by Alimentation Couche-Tard's announcement that it will launch a voluntary tender offer for Poland's Zabka at 32 zlotys a share. This development is seen as a test of whether the company can still make its bid financeable and earnings-adding under higher borrowing costs and currency funding.

Energy stocks slipped as oil prices held steady, but Couche-Tard's offer was the big story in the index on this day.