Canada’s main stock index edged upward Wednesday after falling more than one per cent the day before, while U.S. markets were mixed.
The S&P/TSX composite index was up 70.99 points at 20,346.53.
In New York, the Dow Jones industrial average was down 58.06 points at 32,798.40. The S&P 500 index was up 5.64 points at 3,992.01,while the Nasdaq composite was up 45.67 points at 11,576.00.
The mood on Wednesday — cautious — is likely going to remain for the rest of March, said Greg Taylor, chief investment officer at Purpose Investments.
After Tuesday’s market slump on hawkish comments by Federal Reserve chairman Jerome Powell, there was virtually no bouncing back on equity markets the next day, Taylor said.
“People are … sitting on their hands, because there’s still a lot of uncertainty out there,” he said.
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With equity markets beholden to the bond markets, investors — much like the Federal Reserve, itself — are now waiting for more data to indicate where interest rates are going, said Taylor.
There are two major U.S. economic data releases between now and the next Fed decision, with employment data on Friday and inflation next week. Canada will also release new employment data Friday.
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Last month’s U.S. payroll data release set off volatility in the markets through February, and could do the same this time, said Taylor.
“We’ve got a lot of big data points coming up ? and I think that uncertainty is causing people to really step back and be a little more cautious than they have been in the past,” he said.
Meanwhile, the Bank of Canada decided not to hike interest rates Wednesday. That did not come as a surprise to investors, as the central bank started tightening earlier than many of its peers, said Taylor.
However, the central bank will have to keep an eye on the Canadian dollar now that its policy is more definitively diverging from the Fed’s, said Taylor. The loonie hit a four-month low Wednesday against the U.S. dollar and could suffer further against its international peers if other central banks continue to tighten amid the Bank of Canada’s pause, Taylor said.
“The big debate will be at what point does the dollar move have an impact on Bank of Canada policy?” said Taylor.
The Canadian dollar traded for 72.54 U.S. cents compared with 72.90 U.S. cents on Tuesday.
The April crude contract was down 92 cents at US$76.66 per barreland the April natural gas contract was down 14 cents at US$2.55 per mmBTU.
The April gold contract was down US$1.40 at US$1,818.60 an ounceand the May copper contract was up five cents at US$4.03 a pound.
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