TORONTO, Oct 29 (Reuters) - Canada's main stock index fell on Wednesday as the Bank of Canada cut interest rates to support a faltering economy and investors worried that an upcoming federal budget could show hefty deficit spending.
The S&P/TSX composite index (.GSPTSE), ended down 274.90 points, or 0.9%, at 30,144.78.
The Bank of Canada signaled an end to its interest rate cutting cycle after lowering its benchmark rate to a three-year low of 2.25%, and cut its 2025 growth forecast to 1.2% from 1.8% in January.
"The worrying thing is (interest rates) were cut because our economy is weakening as this trade dispute continues" with the United States, said Michael Sprung, president at Sprung Investment Management. "The other thing that is really on investors' minds in Canada is the budget next week, rumors have it that it could be an extremely high deficit again."
Canada is due to present its federal budget on Tuesday. Economists forecast the government's fiscal deficit for the 2025-26 fiscal year will be between C$70 billion ($49.91 billion) and C$100 billion, a massive jump from the projected C$43 billion for the fiscal year that ended March 2025.
The U.S. benchmark S&P 500 finished close to flat after the Federal Reserve cut interest rates but Fed Chair Jerome Powell said another rate cut in December is far from assured.
Consumer staples (.GSPTTCS), posted the biggest decline among the 10 major sectors, falling 3.7%.
Technology lost 1.7%, with shares of Constellation Software Inc (CSU.TO), down nearly 8%.
Industrials (.GSPTTIN), declined 1.6% and heavily weighted financials (.SPTTFS), ended 1.3% lower.
Energy was a bright spot (.SPTTEN). It added 1% as the price of oil settled 0.55% higher at $60.48 a barrel.
The materials group (.GSPTTMT), which includes metal-mining shares, also notched gains, adding 0.3%, as copper prices rose.
($1 = 1.4024 Canadian dollars)
Reporting by Fergal Smith in Toronto and Ragini Mathur in Bengaluru; Editing by Vijay Kishore, Rod Nickel
