Canada’s main stock index edged slightly higher on Tuesday, while U.S. markets reached a new high, ahead of a pair of interest rate decisions from the Bank of Canada and the U.S. Federal Reserve.
Kim Inglis, senior portfolio manager at Raymond James, said that trading on the TSX was pretty muted with “markets flipping back and forth between political rhetoric going on and expectations on the central bank.”
The S&P/TSX composite index was up 3.08 points at 33,096.40.
Many economists expect no change in the Bank of Canada’s benchmark interest rate on Wednesday and possibly for the rest of the year. Financial market odds for a rate hold this week stood at 93% as of Tuesday afternoon, according to LSEG Data & Analytics.
“Especially lately, people are really analyzing every little word that comes out from both central banks. It is expected, probably a hold here in Canada,” Inglis said.
“Depending on what economist you’re looking at, I would say that the forecast is generally either one rate cut this year or none.”
Meanwhile, the Fed will announce its next move on rates on Wednesday, but the widespread expectation is that it will also hold steady for now.
Inflation remains stubbornly above the Fed’s 2% target, and lower interest rates could worsen increases in prices for U.S. consumers at the same time that they give the economy a boost. Traders expect the Fed to resume its cuts to interest rates later this year.
Inglis said the market will be paying attention to any information on who will succeed Fed chair Jerome Powell, whose term finishes on May 15, and whether the new chair would be likely to cut interest rates or not.
In New York, the Dow Jones industrial average was down 408.99 points at 49,003.41. The S&P 500 index was up 28.37 points at 6,978.60, while the Nasdaq composite was up 215.74 points at 23,817.10. The S&P 500 edged past its prior all-time high set a couple weeks ago, even though more stocks fell within the index than rose.
Several of Wall Street’s most influential stocks will deliver their latest earnings reports later this week. They include Meta Platforms, Microsoft and Tesla on Wednesday and Apple on Thursday.
“Tech’s been in such focus the last couple of years that I think investors are really getting anxious about a correction in that space … There’s going to be a lot more attention paid to their earnings when they come out,” Inglis said.
“I think that if they miss their targets at all, they’d be more heavily punished probably than normal because I think people are looking for a reason for a pullback in that space.”
Several of those big tech stocks were among the strongest forces lifting the S&P 500 Tuesday, including gains of 2.2% for Microsoft and 1.1% for Apple.
The Canadian dollar traded for 73.42 cents US compared with 72.98 cents US on Monday.
The March crude oil contract was up US$1.76 at US$62.39 per barrel.
The February gold contract was up one cent US at US$5,082.60 an ounce.
— With files from The Associated Press