S&P/TSX composite and U.S. markets reverse morning gains, close down

TORONTO –

Canada’s essential inventory index noticed a lack of greater than half a per cent Wednesday, reversing slight mid-morning good points, whereas U.S. markets had been additionally down on the shut after starting the day on a extra optimistic streak.

The S&P/TSX composite index was down 131.81 factors at 19,891.65.

In New York, the Dow Jones industrial common was down 142.29 factors at 33,966.35. The S&P 500 index was down 24.33 factors at 3,995.32, whereas the Nasdaq composite was down 85.92 factors at 11,170.89.

Mackenzie Investments economist Jules Boudreau mentioned the market is holding up surprisingly nicely given Wednesday was the final Federal Reserve charge hike of the yr.

“It’s a bit of a puzzle,” he mentioned.

Boudreau mentioned he had anticipated a extra intense response from markets to Wednesday’s charge resolution from the Federal Reserve.

While the half share level hike itself wasn’t a shock, Fed Chair Jerome Powell’s feedback had been fairly hawkish, famous Boudreau, making clear the Fed’s intention to proceed elevating charges in 2023.

“I would say that in 2022, we have not had a Fed meeting where the market reaction was as tame as it was now,” he mentioned. “Overall, I would say it’s surprising that markets are not down more.”

For instance, the Dow went down by greater than 1.5 per cent the day of the final Fed charge hike, in comparison with lower than half a per cent this time round.

This tame response could also be as a result of general optimistic sentiment, seasonal developments, and light-weight positioning amongst traders, mentioned Boudreau.

“There’s less room for markets to go down on news, like we’re seeing today. And at the other end of it, when we get positive news, we’re much more likely to get these big pops like we’ve been seeing around CPI release dates over the past few months and previous Fed messaging.”

The previous week has been a gradual one for the TSX, he mentioned, with volatility at pre-pandemic lows.

Powell’s feedback echoed Bank of Canada Governor Tiff Macklem’s speech Monday the place he warned that inflation will likely be laborious to combat, however his U.S. counterpart was extra aggressive, mentioned Boudreau. The Bank of Canada has mentioned it’ll be data-driven in its charge choices going ahead, leaving room for the chance that it will not elevate charges additional, whereas the Fed’s path is extra clear, he mentioned.

The Canadian greenback traded for 73.74 cents US in contrast with 73.82 cents US on Tuesday.

The January crude contract was up US$1.89 at US$77.28 per barreland the January pure gasoline contract was down 51 cents at US$6.43 per mmBTU.

The unfold between WTI and Canadian benchmarks is broad proper now as a result of Keystone pipeline leak, mentioned Goudreau. He mentioned the leak additionally helps clarify a giant a part of general oil costs rising Wednesday regardless of greater stock, and why Canadian power shares aren’t having nearly as good a day as oil costs are.

The TSX power index was basically unchanged Wednesday, whereas most different sectors posted small losses.

The February gold contract was down US$6.80 at US$1,818.70 an oz and the March copper contract was up 4 cents at US$3.88 a pound.

This report by The Canadian Press was first revealed Dec. 14, 2022