Markets Struggle for Direction; Bank of Canada Hikes Rates by 50 Basis Points
Market Watch – June 3, 2022
Although U.S. markets were closed for the Memorial Day holiday, the TSX continued its winning streak on Monday, hitting its highest level in nearly four weeks.
Although U.S. markets were closed for the Memorial Day holiday, the TSX continued its winning streak on Monday, hitting its highest level in nearly four weeks.
Canada’s main index closed 171 points higher, led by tech and financials, which rose 1.9% and 0.8%, respectively.
North American stocks fell Tuesday, however, ending the month of May on a down note, as investors continue to assess a range of concerns — from inflation and rising rates to the war in Ukraine and slowing global growth. The Dow dropped 223 points on Tuesday, while the S&P 500 and Nasdaq fell 26 and 50 points, respectively. In Canada, the TSX snapped its seven-day winning streak, dropping 190 points on weakness in the energy and materials sectors.
Meanwhile Statistics Canada reported Tuesday that Q1 GDP grew at an annualized rate of 3.1%, setting the stage on Wednesday for another significant rate hike from the Bank of Canada (BoC).
As expected, the BoC hiked its key policy rate by 50 basis points on Wednesday, noting that the central bank was prepared to “act more forcefully,” leaving analysts to wonder if a 75-basis-point hike might be an option if inflation remains unchecked.
North American indexes were in the red once again on Wednesday as trading remained choppy. The Dow dropped 177 points, while the S&P 500 and Nasdaq declined 31 and 87 points, respectively. In Canada, the TSX was essentially flat, dropping 15 points. According to analysts, indexes may trade sideways until markets have more clarity on inflation and the future path of rate hikes.
It was another volatile session for U.S. stocks Thursday, as investors parsed U.S. employment data for possible signs of cooling labour demand, which could alleviate some inflation concerns. By Thursday’s close, the Nasdaq rose nearly 2.7%, the S&P 500 added 1.8% (on strength in the Consumer Discretionary sector), and the Dow rose 1.3%. In Canada, the TSX added 318 points, buoyed by the Materials, Industrials and Technology sectors.
North American Markets Regain Ground
For the four trading days covered in this report, the Dow added 35 points to close at 33,248, the S&P 500 rose 19 points to settle at 4,177, while the tech-heavy Nasdaq jumped 186 points to close at 12,317. In Canada, the TSX surged 284 points to end at 21,032.