A gauge of global stocks sputtered for a third straight session on Wednesday, unable to build on a jump in Chinese equities, while the Canadian dollar weakened after a dovish turn by the Bank of Canada.
Major U.S. indexes once again struggled to muster any positive momentum, with the S&P 500 appearing to have met a strong resistance point around the 2,800 level. After a strong start to the year, a lack of developments in trade negotiations between the United States and China has provided little incentive for investors to push equities higher.
“There’s nothing specific, the market has gained so much in such a short period of time, it has priced in a lot of the positive outcomes related to trade,” said Aaron Clark, portfolio manager at GW&K Investment Management in Boston, Massachusetts.
Canada’s main stock index finished flat on Wednesday, after the Bank of Canada kept interest rates unchanged in line with expectations in the wake of a broad economic slowdown.
The BoC said there was “increased uncertainty” around the timing of future rate increases as it expects the economy to be weaker in the first half of 2019 than projected in January.
The central bank made it clear that future rate hike plans are still on the table, but not imminent.
The interest-rate sensitive financials sector edged 0.1 per cent higher.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 5.53 points, or 0.03 per cent, at 16,092.07.
The energy sector shed 1.3 per cent, as oil prices eased due to bullish output forecasts by two big U.S. producers and a build in weekly U.S. crude stockpiles outweighed OPEC-led production cuts.
The Canadian dollar weakened to a two-month low against its U.S. counterpart, as oil prices fell and the government reported a record high trade deficit in December.
Data showed Canada racked up a record trade deficit of $4.59-billion in December as the value of exports slumped by the most in over 11 years due to lower crude oil prices.
In New York, the Dow Jones Industrial Average fell 132.7 points, or 0.51 per cent, to 25,673.93, the S&P 500 lost 18.16 points, or 0.65 per cent, to 2,771.49 and the Nasdaq Composite dropped 70.44 points, or 0.93 per cent, to 7,505.92.
Even with little on the trade front, Chinese shares surged to a nine-month high, bolstered by hopes of more stimulus measures from Beijing after China’s state planner said the government would implement measures to further boost domestic consumption to counter the impact of a slowing economy.
European shares closed just below the unchanged mark, as weak results from the troubled auto sector weighed and investor confidence in a rally that has sent stocks shooting up this year showed signs of fraying.
The pan-European STOXX 600 index lost 0.04 per cent and MSCI’s gauge of stocks across the globe shed 0.26 per cent.
In the latest sign of global central bank dovishness, the Bank of Canada held interest rates steady as expected on Wednesday amid a slowing economy and said there was “increased uncertainty” around the timing of future rate increases.
That in turned pushed the Canadian dollar to its worst level in about two months versus the greenback. The dollar index rose 0.01 per cent, with the euro unchanged at $1.1306.
The Canadian dollar fell 0.59 per cent versus the greenback to 1.34 per dollar.
Despite the dovish lean by central banks, the Federal Reserve reported the U.S. economy continued growing in the first weeks of 2019 amid a still tight labor market in the face of a 35-day partial federal government shutdown and slowing global growth.
Crude oil futures were mixed on Wednesday after U.S. government data showed an unexpectedly sharp build in crude inventories, though a third straight drop in gasoline stocks supported prices.
Brent crude futures settled at $65.99 a barrel, up 13 cents, or 0.2 per cent. U.S. crude oil futures ended down 34 cents, or 0.6 per cent, at $56.22 a barrel.
U.S. crude inventories rose 7.1 million barrels last week, far exceeding analysts’ expectations for a build of 1.2 million barrels, the Energy Information Administration (EIA) said.
Gasoline stocks, however, fell 4.2 million barrels, compared with analysts’ expectations for a 2.1 million-barrel drop. U.S. gasoline futures gained about 1 percent.
“A solid bearish build to crude inventories has been offset by some chunky draws to the products,” said Matthew Smith, director of commodity research at ClipperData.
Reuters