Canada’s main stock index moved lower on Tuesday, weighed down by losses in energy, utilities and battery metals, while U.S. markets rose after the latest inflation report ahead of Wednesday’s interest rate announcement.
The S&P/TSX composite index closed down 84.52 points at 20,233.84.
In New York, the Dow Jones industrial average was up 173.01 points at 36,577.94. The S&P 500 index was up 21.26 points at 4,643.70, while the Nasdaq composite was up 100.91 points at 14,533.40.
The latest report on U.S. inflation showed prices rose 3.1 per cent year-over-year in November, a slight slowdown from 3.2 per cent in October. The headline number was in line with economists’ expectations.
The report comes one day before the U.S. Federal Reserve is slated to make its final interest rate announcement of the year.
“It doesn’t really change the narrative for the Fed,” said Tamsin Wilding, principal and portfolio manager for fixed income at Leith Wheeler Investment Counsel Ltd.
The report shows continued progress in the fight against inflation, but not enough of a surprise either way to change expectations that the Fed will hold its overnight rate steady tomorrow, she said.
“It still gives them the chance to buy themselves more time.”
Over the past week or so, especially as more economic data is released, the market has been increasingly pulling back some of its aggressive rate-cut calls for 2024, said Wilding.
Wilding said she doesn’t expect the central bank’s comments to change much, either.
“I think the Fed needs to continue to push that rhetoric of, they’re not thinking about rate cuts yet, that there is still risk of further rate hikes.”
She thinks the Fed is in a more neutral position than it’s letting on, but is erring on the side of hawkishness so it doesn’t validate markets’ calls for rate cuts.
“They’re still in a buying time mode,” said Wilding.
“They’ve said that they need to see more clear and convincing progress … they need to see a longer and more convincing trend.”
The TSX energy index fell 2.3 per cent Tuesday as the price of oil once again fell below US$70 a barrel.
The Canadian dollar traded for 73.53 cents US compared with 73.69 cents US on Monday.
The January crude oil contract was down US$2.71 at US$68.61 per barrel and the January natural gas contract was down 12 cents at US$2.31 per mmBTU.
The February gold contract was down 50 cents at US$1,993.20 an ounce and the March copper contract was up a penny at US$3.79 a pound.
— With files from The Associated Press
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