TORONTO — Canada's main stock index moved lower Tuesday after the latest report on inflation showed price growth easing, while U.S. markets were also lower.
The S&P/TSX composite index closed down 78.95 points at 23,037.44.
In New York, the Dow Jones industrial average was down 61.56 points at 40,834.97. The S&P 500 index was down 11.13 points at 5,597.12, while the Nasdaq composite was down 59.83 points at 17,816.94.
Markets took a pause Tuesday to consolidate after eight straight winning days, said Lesley Marks, chief investment officer of equity at Mackenzie Investments.
She said the market is a little bit cautious ahead of this weekend’s annual symposium in Jackson Hole, Wyo. Investors are wondering what U.S. Federal Reserve chair Jerome Powell will have to say.
“I think after the strong move that we’ve seen in markets, people are just taking a breather to wait and see,” said Marks.
Investors will be listening for hints on what’s to come in September from the Fed, said Marks — not necessarily whether they will cut, since that’s pretty much a given, but on whether a deeper cut of 50 basis points, or half a percentage point, could be in the cards.
Economic data recently has been mixed but not decidedly negative, said Marks, making it unclear whether there’s an economic downturn on the way.
“I think that’s what the market is really grappling with.”
The big question hanging in the air is whether the Fed has waited too long to cut, said Marks, and the answer to that question isn’t clear yet.
“I think there is a thesis that moving 50 (basis points) would be a recognition that they're late to cut interest rates. So 25 basis points may actually put more calm in the market,” she said.
The latest report on inflation in Canada showed price growth continued to ease in July to 2.5 per cent, down from 2.7 per cent in June.
“The inflation data that we saw this morning definitely indicated that the window continues to be open for the Bank of Canada to continue to ease,” said Marks.
“The Canadian economy has been slowing for over a year, and so the Bank of Canada has recognized that.”
The inflation report is one of the last big pieces of information before the Bank of Canada’s Sept. 4 rate decision, she said, with GDP yet to come.
The Canadian dollar traded for 73.38 cents US compared with 73.25 cents US on Monday.
The October crude oil contract was down 49 cents at US$73.17 per barrel and the September natural gas contract was down four cents at US$2.20 per mmBTU.
The December gold contract was up US$9.30 at US$2,550.60 an ounce and the September copper contract was down two cents at US$4.16 a pound.
This report by The Canadian Press was first published Aug. 20, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press