TORONTO — Weakness in the energy sector offset gains elsewhere to leave Canada's main stock index essentially flat Wednesday, while U.S. markets were mixed as investors focus on job numbers.
The energy sector was under pressure as crude fell under US$70, closing down US$1.14 at US$69.20 per barrel.
The S&P/TSX energy index was down about 1.8 per cent, offsetting modest gains in financials, telecoms and utilities to leave the S&P/TSX composite index down 1.69 points at 23,040.76.
The pullback in energy was part of a wider mild risk-off day, as the Bank of Canada's widely expected rate drop did little to sway markets, said Konstantin Boehmer, head of fixed income at Mackenzie Investments.
"I don't think there's a real impulse on Canada from the Bank of Canada decision," he said.
"I think that it was fully expected, is fully understood, that the Bank of Canada had to cut 25 basis points and will continue to cut rates."
Instead it was a U.S. report on job openings, which is usually a fairly minor data point, that affected markets as it showed less hiring.
"That number came down quite aggressively ... because we're focusing on the labour market and this is one indication of the strength of the labour market, this has caught the market's attention."
The report is a hint of what's to come Friday as the U.S. reports the last big jobs report before the U.S. Federal Reserve rate decision on Sept. 18.
"So that sets the tone in the market, which is not a great one."
In New York, the Dow Jones industrial average was up 38.04 points at 40,974.97. The S&P 500 index was down 8.86 points at 5,520.07, while the Nasdaq composite was down 52 points at 17,084.30.
The Canadian dollar traded for 73.94 cents US compared with 73.81 cents US on Tuesday as the Bank of Canada made its widely expected quarter percentage point rate cut.
But the slight boost to the loonie was more a result of pressure on the U.S. dollar, rather than a notable bump from the Bank of Canada rate decision, said Boehmer.
"The logic is because economic data is weaker, expectations for that rate cut are becoming greater. And because of the greater rate cut expectations, that is typically seen as negative for the U.S. dollar."
Speculation the U.S. Fed will cut by half a percentage point is growing, sitting at about a 40 per cent chance compared with a 60 per cent chance for a quarter percentage point cut, he said.
The potential for a bigger cut comes as investors look a little more cautiously, said Boehmer.
"Not panic, but just continuation of maybe taking some chips off the table, and looking at the U.S. economy slightly more worried than before."
The October natural gas contract was down five cents at US$2.15 per mmBTU. The December gold contract was up US$3 at US$2,526 an ounce and the December copper contract was down a penny at US$4.08 a pound.
This report by The Canadian Press was first published Sept. 4, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press
