Canada’s principal stock index lost just over half a per cent Thursday amid weakness in energy and technology, while U.S. markets fell further.
The S&P/TSX composite index was down 113.97 points at 20,606.42.
In Latest York, the Dow Jones industrial average was down 431.20 points, or 1.3 per cent, at 33,696.85. The S&P 500 index was down 57.19 points, or 1.4 per cent, at 4,090.41,while the Nasdaq composite was down 214.76 points, or 1.8 per cent, at 11,855.83.
Markets saw a little bit of a slump Thursday, said Lesley Marks, chief investment officer of equity at Mackenzie Investments.
Recent economic data has given further support to a more hawkish approach from the U.S. Federal Reserve, she said, with one or two more rate hikes a certainty, and one other one in Canada looking more likely.
Governor Tiff Macklem was daring within the last Bank of Canada meeting when he talked about pausing rate hikes conditionally, but in comments Thursday he left the door open, said Marks.
But because of the Canadian consumer’s sensitivity to rates of interest and their effect up to now on the housing market, she thinks the central bank won’t change its mind immediately.
“House prices proceed to fall. We all know that Canadians have a major debt burden, and the Bank of Canada recognizes that. And in order that they’re prone to be cautious about increasing rates of interest, until there’s more data that supports that,” she said.
While earlier, strong economic data was cause for concern about rate hikes and a recession, now it’s fueling cautious optimism that a soft landing is the most definitely scenario, said Marks.
China’s reopening surprise has helped shift that outlook upward, she said.
However the economy isn’t out of the woods yet, said Marks. The past three years have been characterised by unprecedented times, and the present economic environment is unlike what has come before.
“We shouldn’t diminish the importance of the unprecedented nature of this economic cycle, since it is fueled by the recovery coming out of a pandemic. And in order that’s why I say we’re in latest territory with regards to the impact of central bank policy,” she said.
The Canadian dollar traded for 74.41 cents US compared with 74.57 cents US on Wednesday.
The April crude oil contract was down nine cents at US$78.74 per barrel and the March natural gas contract was down eight cents at US$2.39 per mmBTU.
The April gold contract was up US$6.50 at US$1,851.80 an oz. and the March copper contract was up 13 cents at US$4.14 a pound.
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