Canada’s main stock index fell on Monday, giving back some of its sharp gains at the end of last week, as financial shares slid and investors awaited a Bank of Canada interest rate decision.
The Toronto Stock Exchange’s S&P/TSX composite index ended down 93.01 points, or 0.5%, at 19,931.62, after posting on Friday its highest closing level in 10 days.
“There really isn’t too much excitement today since we have a BoC interest rate announcement later in the week,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
The BoC became the first major global central bank to pause its rate-hike campaign in January, but the economy’s surprisingly strong performance since then will test Governor Tiff Macklem’s resolve to stay on the sidelines at a policy decision on Wednesday.
Heavily weighted financials fell 1%, while energy was down 0.6% even as Saudi Arabia pledged to cut oil production in a move that boosted oil prices. Oil settled 0.6% higher at $72.15 a barrel.
“Oil might remain stuck in a trading range until we see evidence that China’s recovery is improving,” Edward Moya, senior market analyst at OANDA, said in a note.
Health care fell 1.2%, weighed by a 7.9% decline for the shares of cannabis producer Canopy Growth Corp.
On Friday, S&P Dow Jones Indices said it would delete the once high-flying stock from the Composite Index prior to the open of trading on June 19.
Technology was the lone sector to gain ground, up 0.5%.
The S&P 500 ended lower on Monday as investors weighed whether the U.S. Federal Reserve might pause its interest rate hikes at its upcoming policy meeting, while Apple briefly hit a record high before losing ground.
Apple Inc ended 0.8% lower after the world’s most valuable company unveiled an augmented-reality headset called the Vision Pro, its riskiest and biggest bet since the introduction of the iPhone. Earlier Apple rose as much as 2.2% to an all-time high.
Other heavyweight growth stocks were mixed, with Nvidia Corp dipping 0.4% and giving back some of its recent gains, and Tesla Inc adding 1.7% after the electric vehicle maker’s sales of China-made cars in China jumped in May.
The S&P 500 on Friday closed at its highest level in over nine months after a report showed that wage growth moderated in May.
Following a stronger-than-expected earnings season and expectations the Fed could pause its aggressive monetary tightening cycle, the S&P 500 is up nearly 20% from its closing low in October, lifted by gains in heavyweight tech stocks including Apple, Nvidia and Microsoft Corp.
Reinforcing expectations the Fed could pause its rate hikes, a survey from the Institute for Supply Management showed the U.S. services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed’s fight against inflation.
“That bad news is good news in terms of the Fed. The bad news, meaning weak economic reports, is actually good news because it makes it more likely the Fed will pause its series of interest rate hikes, believing they have begun to do their trick bringing inflation down,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.
Traders have priced in a nearly 80% chance that the Fed will hold interest rates at its June 13-14 policy meeting, according to CME Group’s FedWatch tool, although they expect another hike in July.
The S&P 500 declined 0.20% to end the session at 4,273.79 points.
The Nasdaq declined 0.09% to 13,229.43 points, while Dow Jones Industrial Average declined 0.59% to 33,562.86 points.
Of the 11 S&P 500 sector indexes, seven declined, led lower by industrials, down 0.71%, followed by a 0.58% loss in energy.
Palo Alto Networks Inc climbed 4.4%, with the cybersecurity firm set to replace Dish Network Corp in the S&P 500 index on June 20. Dish shares fell 2.7%.
Big U.S. banks slipped after the Wall Street Journal reported that U.S. regulators were preparing to tighten rules for large banks, which could include raising their capital requirements by 20% on average.
Reuters