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Stocks Tumble On Oil Plunge, Rate Hike -- Canadian Commentary

Canadian stocks were hammered Wednesday amid the biggest one-day drop in oil prices this year.

Also, an interest rate hike from the Bank of Canada rattled investors a bit.

The Bank of Canada on Wednesday raised their key interest rate despite concerns that trade tensions could hurt the global economy.

The BoC increased its target for the overnight rate to 1 1/2 per cent. The Bank Rate is correspondingly 1 3/4 per cent and the deposit rate is 1 1/4 per cent.

The Bank expects the global economy to grow by about 3 3/4 per cent in 2018 and 3 1/2 per cent in 2019, in line with the April Monetary Policy Report (MPR).

With the U.S. also set to raise rates, investors turned cautious after recent optimism.

BoC governor Mark Poloz especially warned of tariffs effecting the auto sector:

"The auto sector's like motherhood and apple pie or something to the Canadian and U.S. economies," he said. "So if you're willing to do something to disrupt all of that, I think people would naturally feel much more vulnerable, they would feel like, well, what's next? There would be a major confidence effect. So I think symbolically it would have a very out-sized effect on the economy."

The TSX Composite Index was down 131.40 points to 16,417.

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