S&P/TSX composite unchanged Tuesday, U.S. markets mixed

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Canada’s main stock index was largely unchanged Tuesday as weakness in energy was offset by gains in telecom and industrials, while U.S. markets were mixed.

The S&P/TSX composite index was down 2.03 points at 20,629.55.

In New York, the Dow Jones industrial average was up 104.40 points at 33,733.96. The S&P 500 index was down 2.86 points at 4,016.95,while the Nasdaq composite was down 30.14 points at 11,334.27.

Markets are anticipating a pivot in interest rate policies from central banks soon, said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.

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The Bank of Canada is widely expected to announce a quarter of a percentage point hike Wednesday and then pause, while the Federal Reserve is also expected to be near the end of its cycle.

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“Certainly, the tone is changing,” said Burkett. “And that’s what’s driven markets higher in the first few weeks of this year.”

He also expects the commentary from central banks will begin to shift, with the Fed tempering some of the inflation-fighting rhetoric that defined its position last year.

U.S. earnings continued to roll in on Tuesday, with some firms missing estimates.

Markets are anticipatory, so while earnings last year were good even as markets declined, now the decline is beginning to show in company results, said Burkett. He expects this will continue as earnings begin to reflect interest rate hikes and their effects on different parts of the economy, and added that results this year are likely to diverge significantly between companies and sectors.

The Canadian dollar traded for 74.79 cents US compared with 74.73 cents US on Monday.

The March crude contract was down US$1.49 at US$80.13 per barrel and the March natural gas contract was down 17 cents at US$3.06 per mmBTU.

Energy weighed on the TSX Tuesday, with the energy index down more than one per cent. The price of oil was down on continued uncertainty regarding future demand from China amid its rocky reopening, said Burkett.

Oil prices were rising late last year because of optimism over a possible recovery and subsequent uptick in demand from China, said Burkett, as well as over the constraint of Russian supply.

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But “neither of those things have delivered in a way that would send oil prices higher,” he said.

The February gold contract was up US$6.80 at US$1,935.40 an ounce and the March copper contract was down a penny at US$4.25 a pound.

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