The markets today
TORONTO (CP) — The Bank of Canada’s more dovish outlook Wednesday drove the loonie to a near four-month low and helped to pull the Toronto stock market down from its record high.
The Canadian dollar traded at an average of 74.21 cents US, the lowest level since Jan. 3 and compared with an average of 74.51 cents US on Tuesday. The move followed the central banks’ latest interest rate announcement to keep its key interest rate target on hold at 1.75 per cent.
Much of what it announced was expected, but it surprised some by dropping any mention of future rate hikes, said Candice Bangsund, portfolio manager for Fiera Capital. “The growth forecasts were much more bearish than what the market was expecting so taken together the dismal outlook for the Canadian economy and the fact that they abandoned their plans to raise interest rates of course weighed on the Canadian dollar... and on Canadian financials,” she said. The Toronto stock market’s heavyweight financials sector fell 0.86 per cent led by the Royal Bank of Canada as bank profitability would be constrained without any move to increase net interest margins. The energy sector decreased 2.3 per cent as oil prices fell following a weekly report pointing to U.S. crude inventories growing 5.5 million barrels last week, far exceeding analyst forecasts. Shares of several large Canadian energy companies decreased, led by Crescent Point Energy Corp. and Suncor Energy Inc., which dropped 5.6 and 3.5 per cent respectively. The June crude contract was down 41 cents at US$65.89 per barrel and the June natural gas contract was up 0.1 of a cent at US$2.50 per mmBTU.
The June gold contract was up US$6.20 at US$1,279.40 an ounce and the May copper contract was up 1.65 cents at US$2.91 a pound. Industrials trailed only the cannabis-heavy health care sector in gaining 0.55 per cent as Transat AT., Bombardier Inc. and Canadian Pacific Railway increased. The Calgary-based railway’s shares were up 2.7 per cent on the day despite missing analyst expectations Tuesday after markets closed. “While they may have had a tough quarter last quarter, the outlook longer-term looks fairly bright,” said Bangsund. Overall, the S&P/TSX composite index closed down 82.88 points to 16,586.52.