July 14th, 2024

TSX moves lower Tuesday ahead of Bank of Canada rate announcement, U.S. markets rise

By Rosa Saba, The Canadian Press on October 24, 2023.

The S&P TSX composite index screen at the TMX Market Centre in downtown Toronto is photographed on Friday, November 11, 2022. THE CANADIAN PRESS/ Tijana Martin

TORONTO – Canada’s main stock index moved lower Tuesday, as energy and battery metals led the way lower on a mixed day of trading, while U.S. markets rose.

“Today seems more of a sort of a choppy consolidation day after the big volatility yesterday,” said Tamsin Wilding, principal and portfolio manager for fixed income at Leith Wheeler Investment Counsel Ltd.

The S&P/TSX composite index closed down 60.25 points at 18,986.49.

In New York, the Dow Jones industrial average was up 204.97 points at 33,141.38. The S&P 500 index was up 30.64 points at 4,247.68, while the Nasdaq composite was up 121.55 points at 13,139.88.

Markets continue to digest the idea that interest rates will remain higher for longer, Wilding said.

“The Fed has come out and they do continue to say that they’re data-dependent, that they’re proceeding cautiously,” she said, as well as that the recent rise in long-term yields helps further the goal of monetary tightening.

“I think that continues to be an overarching narrative or theme of the market.”

Several large companies reported bigger-than-expected profits Tuesday as the third-quarter earnings season continues to unfold south of the border.

Shares in Verizon Communications Inc. closed up more than nine per cent, while General Electric and Coca-Cola also saw their share prices rise after beating profit estimates.

“I think that builds into that whole theme of economic resilience through the third quarter,” said Wilding, noting that the Federal Reserve Bank of Atlanta’s latest estimate for U.S. GDP growth in the third quarter is 5.4 per cent. The latest GDP figure will be released on Thursday.

“That continues to speak to ongoing resilience of the U.S. economy that was probably unexpected at this point of the tightening cycle,” she said.

Canada has been somewhat less resilient, reporting a negative second quarter GDP, noted Wilding.

“I think there’s certainly signs that there’s a faster rollover occurring in the Canadian economy,” she said, with a “string of soft data” over the past week.

On Wednesday, the Bank of Canada is widely expected to announce it’s holding its key rate steady, and the probability of another hike in the coming months has faded, said Wilding.

Markets are pricing in a similar narrative for the U.S. Federal Reserve despite that country’s economic resilience, she said.

“I get the sense that they would prefer to continue to wait and see and wait for … the slowdown in the economy to progress.”

The Canadian dollar traded for 72.83 cents UScompared with 73.03 cents US on Monday.

The December crude contract was down US$1.75 at US$83.74 per barrel and the December natural gas contract was up five cents at US$3.32 per mmBTU.

The December gold contract was down US$1.70 at US$1,986.10 an ounceand the December copper contract was up four cents at US$3.62 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Oct. 24, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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