Canada's main stock market, the Toronto Stock Exchange, was flat to lower at the end of Thursday's session, but still added to the total of more than 530 points lost over the prior four full days, taking the overall index to the 19,969 level, as investors continue to look for more certainty around an endpoint to rate increases.
Deputy Governor Sharon Kozicki on Thursday said the Bank of Canada will be "more data-dependent" when it comes to deciding on whether or not it will need to raise interest rates again in January 2023, after seven successive lifts up to and including Tuesday. The comments came a day after the BoC raised its key benchmark interest rate by 50 basis points to 4.25% and also raised the possibility that could be the endpoint for hikes.
For its part, Goldman Sachs continues to expect a 25bp hike at the January meeting for a terminal rate of 4.5% "because of limited labor market rebalancing so far" but it also thinks that it will be a very close call and it sees a high chance that the BoC does not hike in January.
But in a show of just how diverse the opinions on rates are, Scotiabank continues to expect that the BoC's next move will be a cut late in 2023 given the expected slowing in both inflation and growth. Scotia added a similar dynamic is forecast for the US, though it continues to expect that the Fed will lift rates to 5% early next year before eventually beginning rate cuts late in 2023. A series of additional cuts are expected in 2024.
Among commodities, gold closed back above the US$1,800 mark today on a weaker dollar and lower bond yields, as well as indications of higher physical demand as China's central bank added to its reserves of the metal for the first time in three years. Gold for February delivery closed up $3.40 to US$1,801.50 per ounce.
WTI fell to a new 2022 low on Thursday, the fifth-straight loss as continuing demand worries offset a big drop in US supply as a pipeline carrying nearly a fifth of Canada's oil exports to the United States, TC Energy's (TRP.TO) Keystone pipeline, was shut down following a spill. WTI crude for January delivery closed down $0.55 to US$71.46 per barrel, the lowest since Dec.21 of last year. February Brent crude, the global benchmark, was last seen down $0.90 to US$76.27, while Western Canada Select was down $5.84 to US$39.98, the lowest since January 2021.
The lower oil prices likely weighed on the resources heavy index, while a mixed performance was observed across others sectors. Telecom, down 0.9%, was the biggest decliner followed by Energy. Meanwhile, Base Metals posted gains of 1.7%.