Canada’s primary stock index experienced modest gains on Wednesday as the rise in battery metals, industrials, and healthcare sectors offset the weakness in technology stocks. Meanwhile, the US markets had a mixed performance after another central bank rate hike. The Federal Reserve raised its key interest rate by a quarter of a percentage point, following the Bank of Canada’s move earlier in July, as central banks continue their efforts to combat inflation.
The S&P/TSX composite index closed 10.11 points higher at 20,561.64, while in New York, the Dow Jones industrial average rose by 82.05 points to 35,520.12. However, the S&P 500 index dropped 0.71 points to 4,566.75, and the Nasdaq composite declined by 17.27 points to 14,127.28.
Ryan Crowther, the vice-president and portfolio manager at Franklin Templeton Canada, stated that the market was not surprised by the rate hike and did not react significantly to it or the officials’ remarks after the announcement.
Crowther also mentioned that the Federal Reserve acknowledged some progress in labor markets and wage growth, but he believes that there is still a possibility of a further rate hike in September or later this year. He emphasized that monetary policy changes take longer than expected to produce the desired outcomes.
The second-quarter earnings reports have been mixed, with weakness observed in the industrials sector and strong reports from big tech companies. Crowther explained that while expectations for earnings have been low overall, they have been higher for the large tech stocks that have driven the market’s rally this year.
In other news, Justin Trudeau has made significant changes to his cabinet, which has attracted attention. Dwayne ‘The Rock’ Johnson has also made a substantial seven-figure donation to striking actors, making headlines.
Crowther highlighted the contrasting performance of Microsoft and Alphabet, with the market cap of these two companies totaling four trillion dollars. Despite both companies reporting impressive results, Alphabet’s stock rose nearly six percent, while Microsoft’s shares declined by almost four percent.
More major companies are expected to report their earnings this week, including Canadian companies such as Loblaw, Rogers, and Crescent Point Energy.
The Canadian dollar traded at 75.64 cents US, slightly lower compared to the previous day. The crude oil and natural gas contracts experienced declines, while the gold contract showed a modest increase.
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