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  • Canadian Stocks Slide as Tech Weakness and GDP Miss Weigh on Markets

    Canadian Stocks Slide as Tech Weakness and GDP Miss Weigh on Markets

    Canada’s main stock index closed lower on Friday, mirroring declines in U.S. markets as weakness in technology stocks dragged broader indexes down.

    Brian Madden, chief investment officer at First Avenue Investment Counsel, said the pullback masked signs of underlying strength, pointing to gains in commodities and defensive sectors such as telecoms. He noted that despite the overall decline, there were more advancing stocks than decliners on the day.

    Technology and financial shares weighed most heavily on the S&P/TSX composite index. Madden said software stocks have been under pressure in both Canada and the United States, while financial stocks paused after a strong rally earlier this year.

    Canada’s Big Six banks reported solid earnings this week, beating expectations, but Madden said investors appeared to be taking profits after the sector’s recent run-up.

    Investors also digested new economic data from Statistics Canada showing gross domestic product contracted at an annualized rate of 0.6 per cent in the fourth quarter. The figure missed forecasts from the Bank of Canada and most economists, who had expected flat growth.

    StatCan said the contraction was largely driven by businesses drawing down inventories rather than producing new goods. Madden described the data as disappointing but said it was not as negative as the headline number suggested.

    The S&P/TSX composite index fell 161.97 points to 34,339.99.

    In New York, the Dow Jones industrial average dropped 521.28 points to 48,977.92. The S&P 500 fell 29.98 points to 6,878.88, while the Nasdaq composite lost 210.17 points to 22,668.21.

    U.S. markets were pressured as investors continued to punish companies seen as vulnerable to disruption from artificial intelligence. Software stocks and other firms perceived as potential losers in the AI transition faced renewed selling.

    Block added to market anxiety after CEO Jack Dorsey announced the company would cut nearly half of its workforce as part of an AI-driven restructuring.

    Inflation data also weighed on sentiment after a report showed wholesale inflation in the United States rose 2.9 per cent last month, far above the 1.6 per cent economists had expected.

    Oil prices surged amid escalating tensions between the United States and Iran over Tehran’s nuclear program. The April crude oil contract gained US$1.81 to settle at US$67.02 per barrel, reflecting fears that any conflict in the Middle East could disrupt global oil supplies.

    The Canadian dollar traded at 73.30 cents US compared with 73.06 cents US on Thursday.

    Gold prices also jumped as investors sought safe-haven assets, with the April gold contract rising US$53.70 to US$5,247.90 an ounce.

  • Stocks and Dollar Climb as Markets Eye Inflation Data and Powell Speech

    Stocks and Dollar Climb as Markets Eye Inflation Data and Powell Speech

    U.S. equity futures made modest gains, with the S&P 500 and Nasdaq 100 each edging up around 0.1%, as investors await critical inflation data and remarks from Federal Reserve Chair Jerome Powell, which could shape expectations for a potential interest rate cut in December. Treasury yields dipped slightly after recent consumer inflation figures kept hopes alive for a rate reduction next month, though the dollar index held firm near two-year highs, continuing its rally amid market speculation.

    This cautious optimism reflects an attempt by investors to balance easing inflation and potential rate cuts with potential economic policy shifts under President-elect Donald Trump, who could introduce aggressive tax and trade policies that may stoke inflation in the coming year. With Republicans sweeping the recent elections, Trump now faces fewer restrictions on his policy moves, which could have substantial market implications.

    Amelie Derambure, a senior multi-asset portfolio manager at Amundi, noted, “There’s some selective optimism around Trump’s policies being growth-friendly and supportive of inflation, albeit not at extreme levels. Market pricing reflects a ‘soft Trump’ approach that emphasizes deregulation and economic stimulus.”

    Dollar Strength on the Rise, Weighing on Global Assets

    The dollar’s surge, which has pushed it up over 2% this month, is adding pressure across various asset classes. Gold prices have been pushed near two-month lows, while the yen has weakened to levels not seen since July. The euro also saw a 0.5% dip, marking its lowest point in over a year, as the dollar’s strength continues to overshadow other currencies, pushing MSCI’s emerging market currency index down for a fifth consecutive day.

    Some analysts are cautious about how long the rate cut momentum can continue, especially given Trump’s potential influence on future Fed policy. Analysts from Brown Brothers Harriman highlighted that Trump’s probable ability to drive his agenda could limit future rate cuts, recommending investors position themselves to capitalize on dollar strength.

    “The market’s pricing on the Fed has already adjusted to reflect this dollar strength, so investors should lean into it,” they advised.

    Market Outlook: Balancing Inflation Hopes and Economic Uncertainty

    With Jerome Powell’s speech anticipated by the markets, any hints about rate policy or inflationary pressures could influence the direction of equities, currencies, and commodities. The market currently reflects a cautious optimism, expecting policies that could stimulate economic growth without triggering runaway inflation.

    Bitcoin also remains steady near its recent highs, trading around $91,000 as investor interest in alternative assets continues amid the broader financial market’s focus on U.S. policy shifts and monetary dynamics.

    As markets await further clarity, the dollar’s robust position and potential for policy-driven growth highlight the tension between easing inflation expectations and a possibly assertive economic agenda under the new administration.

    Source : Swifteradio.com