Canada’s main stock index fell more than 1% on Thursday, as weakness in financials, industrials and telecommunications stocks helped drag the market lower.
The S&P/TSX Composite Index lost 259.81 points to 20,086.72.
In New York, the Dow Jones industrial average fell 543.54 points, or 1.7%, to 32,254.86. The S&P 500 index fell 73.69 points, or 1.9%, to 3,918.32, while the Nasdaq composite fell 237.65 points, or 2.1%, to 11,338.35.
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Markets are still digesting Federal Reserve Chairman Jerome Powell’s comments earlier this week that the central bank may have to be more aggressive with rate hikes even than investors had hoped for. said Anish Chopra, managing director of Portfolio Management Corp.
“They are always worried about inflation. So it seems like the message is higher for longer,” he said.
While U.S. jobless claims data released on Thursday contained a silver lining as claims rose, signaling a potential weakening in the labor market, investors are waiting for nonfarm payrolls data on Friday to have a better idea of whether the labor market has cooled at all. January’s surprise numbers, Chopra said.
“Investors are concerned that the strength in the US labor market will continue,” he said, adding that the market had priced in a bigger rally for the Fed’s decision in March after Powell’s comments.
“Unless there’s a big surprise anyway on the job numbers tomorrow, markets are expecting a 50 basis point hike from the Fed,” Chopra said.
Markets are again expecting an increase of around 200,000 jobs in February, he said, but that assumption was ruled out last time and could be ruled out again.
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Canada will also receive updated jobs data on Friday after the central bank held rates steady on Wednesday for the first time in a year.
Bank of Canada Senior Deputy Governor Carolyn Rogers said in a speech Thursday that the central bank is ready to raise rates further if data shows inflation will not decline in line with its forecast. But so far, things are “broadly proceeding in line” with the bank’s outlook despite ongoing labor market tensions, Rogers said.
The Bank of Canada was the first major central bank to pause tightening, Chopra said, but it is data-dependent like its U.S. counterparts and will continue to monitor the labor market and other key numbers for future decisions.
The Canadian dollar was trading at 72.52 cents US against 72.54 cents US on Wednesday.
The April crude contract was down 94 cents at US$75.72 a barrel and the April natural gas contract was down a penny at US$2.54 a mmBTU.
The April gold contract was up US$16.00 at US$1,834.60 an ounce and the May copper contract was up a penny at US$4.04 per pound.
© 2023 The Canadian Press
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