Description:
Canada’s main stock index slipped on Wednesday after the country’s central bank cut the interest rates in line with investors’ expectations and trimmed its 2024 growth forecast.
At 11:05 a.m. ET (1505 GMT), the S&P/TSX composite index (.GSPTSE) was down 33.85 points, or 0.15%, at 22,778.87.
The Bank of Canada cut its key policy rate by 25 basis points to 4.5%, having once lowered it in June. It also hinted at the likelihood of more cuts this year if inflation continues to ease.
The top lender trimmed its 2024 growth forecast to 1.2%, down from 1.5% in April, in part due to households setting aside more money to pay debts and having less to spend on discretionary items.
“They are calling out the slack in the labor market in Canada and noting an uptick in the unemployment rate and the longer duration of unemployment,” said Brian Madden, chief investment officer at First Avenue Investment Counsel.
“In all likelihood, this statement does pave the way for probably more rate cuts to come.”
Among Canadian sectors, healthcare (.GSPTTHC) led the losses with a 10% decline as Bausch Health Companies (BHC.TO) slumped almost 40% following report of possible bankruptcy filing.
The industrials sector (.SPTTFS) dropped 1.2%, pulled down by a 6% fall in Canadian National Railway (CNR.TO) after the company’s second-quarter results missed estimates.
The materials sector (.GSPTTMT) was the top gainer, boosted by gains in gold prices as investors assessed the timeline of U.S. interest-rate cuts.
The rate-sensitive utilities (.GSPTTUT) sector, which includes high-dividend paying stocks that could particularly benefit from rate cuts, advanced 0.45%.
Separately, consumer staples (.GSPTTCS) also jumped 0.53%.
Source: Reuters.com
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