Canada Stocks Fall Near 270 Pts Over Last Two Hours of Trading, After Less Dovish Than Expected Fed Update and Amid Fears of Recession

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Canada’s main stock market, the Toronto Stock Exchange, fell from 14,533.67 in the minutes before the US Fed’s rates and economic outlook update at 2pm ET to close Wednesday down more than 150 points or 1.1% at 14,264.06 as Fed Chair Powell came across to some market participants at least as “not nearly as dovish” as many onlookers had expected him to be.

Charles Moon, Stocks Strategist at Prosper Trading Academy, told BNN Bloomberg TV shortly before the end of the day’s session that there was nothing said by Powell to stop traders from looking to the downside. “The market is acting like we are going to go in to a recession.The market is acting like the tariff wars are going to continue for years on end, that the US economy is not strengthening and more than anything of course, we look at the job creation — that it will unravel and unemployment is going to sky rocket. All of these things are coming in to play.”

“But,” Moon added, “it is really not true. Ultimately it just seems more the market trading within normalised behaviour. If there is any fear, it is that buyers are going to get run over.”

At home, November CPI was a factor early in the session, as a slowing in core CPI that was supportive of an extended pause on rates involving the Bank of Canada weighed on GoC yields.

Wednesday’s losses on the resources heavy index came as gold futures closed up US$2.80 or 0.2% at US$1,256.40 per ounce, but also as oil prices closed higher, recouping part of a day-prior drop of more than 7%, even after the Energy Information Administration reported U.S. oil inventories fell by a much less than expected 0.5 million barrels. In the last day for the contract, West Texas Intermediate crude for January settled up US$0.96 to $47.20 per barrel. February Brent crude was seen up $0.17 to $56.43. EIA said U.S. commercial inventories fell for the third week to 441.5 million barrels. The third consecutive drop in inventories leaves stocks 7% above the five-year average and was well under consensus forecast of a 2.4 million barrel fall.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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