Canadian and U.S. stock markets fall amid BoC, U.S. Fed interest rate decisions
BNN Bloomberg
Canadian and U.S. stock markets fell on Wednesday amid interest rate decisions from the Bank of Canada and the U.S. Federal Reserve, with both central banks acknowledging inflationary risks from the war in the Middle East.
“It’s exactly what was expected, both the Bank of Canada and the Federal Reserve paused today … a lot of that is back to the uncertainty question -- what is the impact of this war going to be on inflation in the near term?” said Ashish Utarid, assistant vice-president of investment strategy with IG Wealth Management.
The S&P/TSX composite index was down 616.42 points at 32,312.67.
In New York, the Dow Jones industrial average was down 768.11 points at 46,225.15. The S&P 500 index was down 91.39 points at 6,624.70, while the Nasdaq composite was down 327.11 points at 22,152.42.
The Bank of Canada held its benchmark interest rate steady at 2.25 per cent Wednesday as monetary policy-makers wait to see whether a surge in global oil prices tied to war in the Middle East becomes a wider inflation problem.
Bank of Canada governor Tiff Macklem said the energy price surge will almost certainly push inflation higher in the coming months.
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Shares advanced Wednesday in Europe and Asia as oil prices fell back slightly despite a barrage of attacks by Iran on its Gulf neighbours.
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Oil prices resumed their rise on Tuesday because of the war with Iran, but U.S. stocks held steadier this time around.
Oil prices above $100 add pressure on inflation and growth, complicating rate decisions for central banks.
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Markets in Canada and the U.S. were up in late-morning trading on Tuesday despite the ongoing war in Iran.
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Oil tankers are crossing the Strait of Hormuz and Iran’s actions to choke traffic through the shipping route have not hurt the U.S. economy, White House economic adviser Kevin Hassett told CNBC on Tuesday, reiterating the Trump administration’s position that the war should be over in weeks, not months.
Canada’s annual inflation rate slowed in February to 1.8 per cent, but many economists believe the new Statistics Canada data may be the dip before a spike driven by oil prices and the war in Iran.
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Canadian and U.S. stock markets gained ground on Wednesday as oil prices fell and tech stocks rose on both sides of the border.