Canada’s principal stock index closed down almost 100 points Thursday despite strength in energy stocks, while U.S. markets also moved lower a day after rating agency Fitch downgraded the U.S. government’s credit standing from AAA to AA+.
Investors will get more economic data Friday when each Canada and the U.S. release their latest reports on employment.
“It’s a fairly large day tomorrow,” said Hadiza Djataou, VP and portfolio manager of worldwide bonds at Mackenzie Investments.
Investors saw economic data trickle in on Thursday, with a report showing that unemployment applications rose last week but remained relatively low, while a pair of reports showed signs of slowing within the services sector.
The S&P/TSX composite index closed down 97.47 points at 20,120.74.
In Recent York, the Dow Jones industrial average was down 66.63 points at 35,215.89. The S&P 500 index was down 11.50 points at 4,501.89,while the Nasdaq composite was down 13.73 points at 13,959.71.
Over the past month, investors have been collectively celebrating the proven fact that inflation has dipped throughout the goal range for central banks, said Djataou.
“The massive query is, where can we go from here?” she said.
The straightforward part for central banks is finished, said Djataou, but that doesn’t mean the fight is over.
If the central banks’ goal is basically to get inflation back to 2 per cent, the query is how high rates should be with the intention to achieve that focus on, she said. Adding to the problem are the proven fact that a few of the things keeping inflation elevated, like oil prices, are outside the reach of the central banks.
Each the Bank of Canada and the Federal Reserve are set to make their next rate of interest decisions in September. No matter whether or not they hike or hold, officials won’t need to get too specific of their messaging, said Djataou, preferring to depart the door open for hikes while also not stoking hopes of cuts anytime soon.
“The minute they are saying, `We’re done,’ the market goes to start out pricing rate cuts,” she said _ and that’s not what the central bank wants.
The patron has been holding in well thus far, said Djataou, particularly within the U.S. where consumers are less sensitive to rate of interest hikes.
The worth of oil continued its climb north of US$80 Thursday after taking a breather the day before. Nonetheless, though it’s moved higher in recent weeks, it’s still softer than the highs of 2022. Djataou thinks oil will proceed to react to weaker global demand despite supply cuts from the likes of OPEC plus.
“Despite that news, you continue to see weaknesses in oil. And I feel the weakness in oil can also be factoring in a possible slowdown,” she said.
The Canadian dollar traded for 74.90 cents UScompared with 74.99 cents US on Wednesday.
The September crude oil contract was up US$2.06 at US$81.55 per barreland the September natural gas contract was up nine cents at US$2.57 per mmBTU.
The December gold contract was down US$6.20 at US$1,968.80 an oz and the September copper contract was up six cents at US$3.90 a pound.