A signboard is displayed at the TMX in Toronto, Wednesday, Nov. 1, 2023. THE CANADIAN PRESS/Chris Young
TORONTO – Canada’s main stock index was down more than 100 points on Wednesday, dragged lower by losses in energy as oil sank below US$70 a barrel, while U.S. markets were also down.
The Bank of Canada held its overnight rate steady at five per cent in its last interest rate announcement of 2023.
“Higher interest rates are clearly restraining spending,” the bank said in a statement, adding that demand no longer seems to be outpacing supply in the economy.
The central bank’s decision came as no surprise, said Michael Currie, senior investment adviser at TD Wealth.
Investors were listening for any hints that the central bank might drop regarding interest rate cuts, but they came up empty-handed, he said.
The bank didn’t rule out more rate hikes in its announcement Wednesday, saying it’s still concerned about inflation risks.
“They won’t officially say they’re done and they won’t make an official comment as to when they might cut,” said Currie. “They’re hedging their bets.”
The market is expecting cuts to begin next year, said Currie, with TD expecting a cut as soon as April.
Markets nevertheless reacted relatively positively to the announcement, said Currie, but the gains in other sectors were masked by losses in the energy sector as the price of oil fell below US$70 a barrel. The TSX energy index fell more than four per cent Wednesday.
The S&P/TSX composite index closed down 101.72 points at 20,274.21.
The January crude oil contract was down US$2.94 at US$69.38 per barrel.
Oil is being dragged lower by ongoing concerns about demand as the economy slows, said Currie. Those concerns are outweighing things that would otherwise be positive catalysts for oil prices, such as talks of production cuts, he said.
In New York, the Dow Jones industrial average was down 70.13 points at 36,054.43. The S&P 500 index was down 17.84 points at 4,549.34, while the Nasdaq composite was down 83.20 points at 14,146.71.
Markets in the U.S. have had a “funny start” to the month as they digest a “spectacular” November, said Currie.
Fresh economic data in the U.S. showed private employers adding fewer jobs last month than expected.
“The job market’s slowing down in the States, which is really what they want to see,” said Currie.
The Canadian dollar traded for 73.67 cents US compared with 73.64 cents US on Tuesday.
The January natural gas contract was down 14 cents at US$2.57 per mmBTU.
The February gold contract was up US$11.60 at US$2,047.90 an ounce and the March copper contract was down five cents at US$3.73 a pound.
– With files from Nojoud Al Mallees in Ottawa and The Associated Press
This report by The Canadian Press was first published Dec. 6, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
