TORONTO — Strength in energy and base metal stocks helped lift Canada's main stock index on Wednesday, while U.S. stock markets were mixed but held relatively steady.
Markets had a bit of a “rebound day” after two straight days of losses, said Steve Locke, chief investment officer for fixed income and multi-asset strategies at Mackenzie Investments.
The S&P/TSX composite index closed up 37.36 points at 22,112.46.
In New York, the Dow Jones industrial average was down 43.10 points at 39,127.14. The S&P 500 index was up 5.68 points at 5,211.49, while the Nasdaq composite was up 37.01 points at 16,277.46.
Fresh economic data helped rekindle some of investors’ optimism about interest rate cuts, as did a speech by U.S. Federal Reserve chair Jerome Powell, said Locke.
A report from the Institute for Supply Management said construction, retail and other U.S. services businesses continued to grow last month, but not by as much as economists expected.
That’s compared with the ISM report on Monday that said U.S. manufacturing unexpectedly returned to growth last month.
The softer report Wednesday is important because inflation has been stickier in services than in goods, said Locke.
“So that’s good news, really, on the inflation front, and that’s something that has the market a little bit relieved today.”
Powell's speech reiterated plans to cut rates in 2024, saying that recent economic data don’t “materially change the overall picture.”
Most Fed officials “see it as likely to be appropriate” to start cutting their key rate “at some point this year,” he said.
Bond market moves on Wednesday suggested relief, said Locke, and expectations for interest rate cuts moved back toward a projection of three in 2024 after being somewhat trimmed earlier in the week.
“Today’s comments by Powell are taken as reassuring here in the market,” he said.
Expectations for cuts in Canada are roughly the same as in the U.S., Locke said, though the Bank of Canada could cut earlier than the Fed.
Later this week investors will get new economic data on the labour market in Canada and the U.S., where it’s been very strong, said Locke.
“The Fed doesn’t want to see a significant softening of the labour market,” he said, but “a continued slight softening” would be welcome and give them another reason to consider rate cuts.
The Canadian dollar traded for 73.87 cents US compared with 73.68 cents US on Tuesday.
The May crude oil contract was up 28 cents at US$85.43 per barrel and the May natural gas contract was down two cents at US$1.84 per mmBTU.
The June gold contract was up US$33.20 at US$2,315 an ounce and the May copper contract was up 12 cents at US$4.19 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published April 3, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
