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World markets were lower today after U.S. bond yields neared a four-week peak, pressuring stocks, as data cast new doubts about the timing and extent of Federal Reserve rate cuts.

The sharp improvement in a U.S. consumer confidence measure for May has kept the market guessing about the strength of the economy and sticky inflationary pressures.

Wall Street opened lower, with investors turning risk averse on as Fed rate cut concerns. The Dow Jones Industrial Average fell 136.6 points or 0.35 per cent at the open to 38,716.28. The S&P 500 slid 27.3 points or 0.51 per cent to 5278.73, while the Nasdaq Composite dropped 140.5 points or 0.83 per cent to 16,879.35.

The S&P/TSX Composite Index also opened in the red as a slip in gold prices weighed on materials shares. At the bell, the index was down 186.72 points or 0.84 per cent at 22,078.33.

In Canada, investors are getting results from Bank of Montreal, National Bank of Canada and Descartes Systems Group Inc.

BMO has reported higher second-quarter profit but missed analysts’ estimates as the lender set aside more money for loans that could default. It raised its quarterly dividend by 4 cents.

National Bank of Canada has recorded higher second-quarter profit that beat analysts’ estimates on a boost from its capital markets division, even as it set aside more money for loans that could default. It also raised its quarterly dividend by 4 cents.

On Wall Street, markets are watching results from EQB Inc., HP Inc. and Salesforce Inc.

“These expectations of Fed rate cuts have been pared back,” said Aneeka Gupta, director of macroeconomic research at WisdomTree. “Overnight we had [the Fed’s] Neel Kashkari mention that we still can’t take the possibility of a rate hike in 2024 off the table.”

Overseas, the pan-European STOXX 600 fell for a second day, down 1.05 per cent in morning trading. Britain’s FTSE 100 slipped 0.75 per cent, Germany’s DAX dropped 1.2 per cent and France’s CAC 40 gave back 1.53 per cent.

In Asia, Japan’s Nikkei closed 0.77 per cent lower at 38,556.87, while Hong Kong’s Hang Seng retreated 1.83 per cent to 18,477.01.

Wednesday’s analyst upgrades and downgrades


Oil prices rose on expectations OPEC+ producers will maintain output cuts at a meeting this Sunday, and that fuel consumption should begin rising with the start of the peak summer demand season.

Brent crude futures for July delivery advanced 57 US cents or 0.68 per cent to US$84.88. U.S. West Texas Intermediate (WTI) futures for July climbed 58 US cents or 0.73 per cent to US$80.41. Both benchmarks gained more than 1 per cent yesterday.

“The onset of the summer driving season in the U.S. spurs a seasonal uptick in consumption and typically aids a positive momentum in crude oil prices,” said Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet.

In other commodities, gold eased. Spot gold fell 0.75 per cent to US$2,342.20 per ounce and U.S. gold futures fell 0.1 per cent to US$2,355.10.

Currencies and bonds

The U.S. dollar was bolstered by rising expectations that the Fed won’t start cutting rates soon, while the loonie lost footing against the greenback.

The day range on the Canadian dollar was 73.10 US cents to 73.31 US cents in the early premarket period. The loonie was up about 0.57 per cent against the U.S. dollar over the past month.

The U.S. dollar index, which weighs the greenback against a group of currencies, was little changed at 104.7, inching away from the near two-week low of 104.33 it touched yesterday. The index is down 1.5 per cent in May.

The euro softened on German inflation data, down 0.2 per cent to US$1.0838. The British pound was flat at U$$1.2762, having hit a two-month high yesterday.

In bonds, the yield on the U.S. 10-year note advanced 0.03 per cent to 4.592 per cent.

Other corporate news

Anglo American has rejected BHP Group’s last-ditch request for more time to discuss a US$49-billion takeover offer, dismissing it as highly complex and ending a five-week pursuit by the bigger rival.

ConocoPhillips has agreed to buy Marathon Oil in a US$22.5-billion all-stock deal, the latest in a series of mega-deals in the oil and gas industry as companies look to bolster reserves.

Economic news

(10 a.m. ET) U.S. Richmond Fed Manufacturing Index for May.

(2 p.m. ET) U.S. Beige Book released.

With Reuters and The Canadian Press

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