Canadian stocks moved lower on Tuesday following remarks by the chair of the US Federal Reserve. The remarks raised concerns about the trajectory of interest rate decreases in the world’s largest economy, despite domestic manufacturing statistics showing losses.
The S&P/TSX composite index on the Toronto Stock Exchange was down 31.01 points, or 0.14%, at 21,844.78 at 10:19 a.m. ET (14:19 GMT).
Yields on US and Canadian Treasuries dropped in response to Fed Chair Jerome Powell’s statement. He emphasized that the US central bank needed more data to ensure recent lower inflation readings accurately reflect underlying price pressures.
According to LSEG data, money markets currently project a 41% chance that the Bank of Canada will decrease rates in July. They also indicate a 63% possibility that the U.S. Fed will cut rates in September.
Energy led all industries, increasing by 1.2% as oil prices spiked. This was due to anticipation of increased demand during the summer driving season and potential supply interruptions from Hurricane Beryl.
Rising U.S. Treasury yields and a strengthening dollar pressured spot gold prices, causing a 0.1% decline in the materials sector. This sector includes miners of both base and precious metals.
“I think the next surge in gold may not happen until we get rate cuts or at least until the market prices in rate cuts going forward,” Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
In the meantime, businesses in Canadian manufacturing experienced a fall in new orders and initiated job cuts in June. This downturn marks the sector’s prolonged record-breaking period of contraction, spanning five months.
Prices of individual stocks increased by 0.5% when Air Canada announced that it had reached an agreement with lessor BOC Aviation to take delivery of eight Boeing 737 MAX 8 aircraft.
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