Canada’s main stock index received a boost from strength in industrials and metals, offsetting weakness in the energy sector. Meanwhile, U.S. stock markets showed mixed results following the Federal Reserve’s decision to hold interest rates steady.
In a surprising move, the Federal Reserve kept interest rates unchanged for the first time in 15 months after a series of consecutive rate hikes. However, it was made clear that more rate hikes are to be expected in the future. Fed Chair Jerome Powell emphasized the bank’s commitment to bringing inflation down to its two percent target, acknowledging that it will be a gradual process.
The S&P/TSX composite index rose by 24.69 points to reach 20,015.09. Conversely, the Dow Jones industrial average in New York declined by 232.79 points to 33,979.33. The S&P 500 index increased by 3.58 points to 4,372.59, and the Nasdaq composite rose by 53.16 points to 13,626.48.
While investors anticipated the rate pause, the central bank’s messaging was unexpected. Rather than indicating uncertainty about future rate hikes, the Fed made it clear that rates will indeed rise again in the near future, signaling the possibility of two hikes this year.
Michael Currie, a senior investment adviser at TD Wealth, described the messaging as a statement of fact. The bank’s economic projections also exceeded expectations, projecting that the benchmark rate will remain high for an extended period as the bank aims to decisively bring down inflation.
Currie believes that this development should dispel any remaining expectations of rate cuts in 2023 since the bank has communicated that the path to its inflation target will be lengthy.
In addition, the central bank’s announcement followed positive inflation data, although Wednesday’s producer prices fell short of expectations. The updated forecasts indicate higher economic growth in 2023 and continued core inflation.
Currie suggests that another rate hike is possible in Canada following last week’s increase, highlighting the rapid changes in expectations.
The Canadian dollar traded at 75.20 cents US, slightly higher than the previous day. Crude oil prices declined by US$1.15, reaching US$68.27 per barrel, while natural gas prices saw a minimal increase to US$2.34 per mmBTU. Gold prices rose by US$10.30 to reach US$1,968.90 per ounce, and copper prices increased by four cents to US$3.87 per pound.
It is worth noting that the information in this article was sourced from The Associated Press.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
