On Tuesday, both Canadian and U.S. stock markets reported losses as investors awaited the Bank of Canada's interest rate decision scheduled for Wednesday. The S&P/TSX composite index fell 131.60 points to 20,413.76, while in New York, the Dow Jones industrial average dropped 195.74 points to 34,641.97. Similarly, the S&P 500 index was down 18.94 points at 4,496.83, and the Nasdaq composite was down 10.86 points at 14,020.95.
Energy stocks and battery metals on the Canadian market experienced an upward trend, but this was overshadowed by weakness in telecom, utilities and base metals sectors. Meanwhile, the Canadian dollar traded for 73.38 cents US, a slight decrease from its Friday value of 73.64 cents US.
The Bank of Canada is anticipated to hold its key rate steady in Wednesday's announcement. However, there is speculation about whether the central bank has concluded its hiking cycle entirely. Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd., believes that the hiking cycle may have ended but anticipates that the bank will maintain a "wait and see" approach to future hikes.
Gardner warned that if the central bank indicates it's done hiking, it could ignite consumer confidence and potentially reignite inflation. "If people start knowing interest rates are coming down, then they will start going out and buying more properties. And real estate is a huge portion of what makes up our inflation in Canada," she explained.
According to Gardner, monetary policy in Canada tends to follow the U.S., but Canada's central bank was the first to hike rates and could be the first to hold or cut.
Last week saw several economic data reports largely indicating a slowly cooling economy which helped boost bets that the U.S. Federal Reserve won't hike rates later this month. This week appears quieter on Wall Street in terms of economic data amid the last trickles of corporate earnings season.
In commodity markets, oil prices continued their summer climb on news of Saudi Arabia and Russia extending production cuts until year-end. The October crude contract was up US$1.14 at US$86.69 per barrel while the October natural gas contract was down 18 cents at US$2.58 per mmBTU.
The December gold contract fell by US$14.50 to US$1,952.60 an ounce and the December copper contract was down slightly at US$3.85 a pound.
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