Canada’s main stock index declined more than 100 points on Tuesday as losses in financial, industrial and telecom stocks outweighed strength in energy and base metals, while U.S. stock markets also fell.
The S&P/TSX composite index closed down 110.15 points at 22,075.10.
In New York, the Dow Jones industrial average was down 396.61 points at 39,170.24. The S&P 500 index was down 37.96 points at 5,205.81, while the Nasdaq composite was down 156.38 points at 16,240.45.
Stocks were down for the second straight day to start the new quarter, said Angelo Kourkafas, senior investment strategist at Edward Jones.
It was the worst day for U.S. stocks in four weeks, with both the Dow and the Nasdaq giving back one per cent.
The decline is being driven by concerns that all the good news about economic strength in the U.S. could mean the Federal Reserve will push back interest rate cuts, he said.
After already paring back expectations for cuts in 2024 to three from six at the start of year, markets are now entertaining the possibility that this year could only bring two cuts, said Kourkafas, and that they could start later than anticipated.
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“The bar for rate hikes is very, very high,” he said.
However, markets were also due for a breather after a long and impressive run, he added.
“The fundamental backdrop remains, in our view, favourable.”
Markets in the U.S. have recently hit multiple record highs, and the Canadian index has hit a few records of its own.
Last week, Fed chair Jerome Powell reiterated that the central bank needs to see more progress on inflation before it’s ready to start cutting interest rates.
In Canada, where the economy has not been as resilient, expectations for cuts are nevertheless also being pushed back somewhat, said Kourkafas — bets are still for roughly three cuts in 2024, but with the first one potentially happening in July instead of June.
This week is all about fresh data on jobs in the U.S. and Canada, he said.
The price of oil also continued to rise, breaking above US$85 per barrel for the first time since October, noted Kourkafas. That’s largely due to escalating tensions in the Middle East and ongoing OPEC production cuts, he said.
The Canadian dollar traded for 73.68 cents US compared with 73.67 cents US on Monday.
The May crude oil contract was up US$1.44 at US$85.15 per barrel and the May natural gas contract was up three cents at US$1.86 per mmBTU.
The June gold contract was up US$24.70 at US$2,281.80 an ounce and the May copper contract was up two cents at US$4.07 a pound.
— With files from The Associated Press
© 2024 The Canadian Press
