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S&P/TSX composite posts loss Tuesday ahead of rate decision, U.S. markets also lower

TORONTO — Canada's main stock index moved lower as investors await an interest rate decision from the Bank of Canada Wednesday, while U.S. stock markets also posted losses.

The S&P/TSX composite index was down 131.60 points at 20,413.76. Energy stocks and battery metals moved higher, while telecom, utilities and base metals led market weakness.

The Bank of Canada is set to announce its latest rate decision on Wednesday. The central bank is widely expected to hold its key rate steady, but the question is whether it’s done its hiking cycle entirely.

“I think that they are done hiking,” said Brianne Gardner, senior wealth manager of Velocity Investment Partners at Raymond James Ltd.

But the central bank will likely leave the door open to further hikes with a “wait and see” message, said Gardner. If it indicates it’s done hiking, it risks sparking confidence for consumers and re-lighting the inflation fire.

“If people start knowing interest rates are coming down, then they will start going out and buying more properties. And real estate is a huge portion of what makes up our inflation in Canada,” she said.

Though monetary policy in Canada tends to follow the U.S., Canada’s central bank was the first to hike rates and could be the first to hold or cut, noted Gardner.

In New York, the Dow Jones industrial average was down 195.74 points at 34,641.97. The S&P 500 index was down 18.94 points at 4,496.83,while the Nasdaq composite was down 10.86 points at 14,020.95.

After making bigger moves to the upside last week, September could see some consolidation and volatility in the markets, said Gardner.

It’s a quieter week on Wall St. in terms of economic data amid the last trickles of corporate earnings season.

Last week saw a number of economic data reports largely showing a slowly cooling economy, helping boost bets that the U.S. Federal Reserve won’t hike rates later this month.

On Wednesday, investors will get the latest report on the U.S. services sector, which will help provide insight on how inflation is affecting consumer spending.

If more positive economic data continues to roll out, markets could go a little higher, said Gardner.

Consumer discretionary, tech and communications have been carrying the market, she said, but it’s also possible that September could bring a rotation toward other sectors.

The Canadian dollar traded for 73.38 cents UScompared with 73.64 cents US on Friday.

The price of oil continued its summer climb, reaching new highs from where it was earlier in the year on the news that Saudi Arabia and Russia are extending production cuts until the end of the year.

The October crude contract was up US$1.14 at US$86.69 per barrel and the October natural gas contract was down 18 cents at US$2.58 per mmBTU.

The December gold contract was down US$14.50 at US$1,952.60 an ounce and the December copper contract was down a less than a penny at US$3.85 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Sept. 5, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Rosa Saba, The Canadian Press