Canada’s main stock index opened higher on Tuesday, after notching its lowest close in more than two years in the previous session, as Bank of Canada Governor Stephen Poloz said interest rate hikes could be interrupted amid signs of slowing growth and low oil prices.
The Toronto Stock Exchange’s S&P/TSX composite index was up 15.8 points, or 0.11 per cent, at 14,378.45.
Poloz, speaking to CTV in an interview, also said tweets by U.S. President Donald Trump were adding to market uncertainty and compared them to a radio station that was not quite clear.
His comments on rates are another sign the central bank - which has tightened monetary policy five times since July 2017 - could put on the brakes amid recent signs the economy is underperforming.
The bank stayed on the sidelines on Dec. 5 and suggested the pace of future hikes could be more gradual, citing disappointing growth and low oil prices.
While investors have baked in a fourth rate hike for the year on Wednesday, turbulence in the stock markets and a host of other worries have fueled calls, including from President Donald Trump, for the Fed to pause its tightening cycle or risk harming the U.S. economy.
Shares of banks, which are sensitive to interest rates, gained in early trading. JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. rose between 0.6 per cent and 1.2 per cent.
But it remains to be seen if the market’s gains hold. In what has been a turbulent month for U.S. stocks, the market has more often than not failed to build on an uptick in early trading.
“There is a lack of confidence in any upward move and we need something tangible to bring confidence into the market,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
“This has been a rather significant sell-off and before market stabilizes we need something tangible whether it’s a trade-deal or whether it’s something from the Fed.”
The S&P 500 has tumbled 7.8 per cent in December, its worst performance since 1931.
Wall Street’s three main indexes are now in correction territory, a level reached when an index closes 10 per cent below its record closing high. The small-cap Russell 2000 index confirmed a bear market on Wednesday, having fallen more than 20 per cent from its Aug. 31 closing high.
Helping sentiment early in the day was Oracle Corp. The business software maker rose 4.8 per cent after forecasting strong current-quarter profit on growth in its cloud business.
Boeing Co. gained for the first time in four days, rising 2.7 per cent after increasing its dividend and share repurchase program.
Oil prices fell on Tuesday after reports of swelling inventories and forecasts of record U.S. and Russian output combined with a sharp sell-off in stock markets as the outlook for global growth deteriorated.
U.S. crude oil dropped $2.04, or 4.1 per cent, to a low of $47.84, its weakest since September 2017. It recovered to around $49.28, down 60 cents.
North Sea Brent lost $2.41, or 4.0 per cent, to $57.20, a 14-month low. Brent last traded around $59.01, also 60 cents lower.
Both oil benchmarks have shed more than 30 per cent since early October due to swelling global inventories.
World stock markets tumbled on Tuesday as fears about a slowing global economy gripped investors, just as the U.S. Federal Reserve looked set this week to deliver its fourth interest-rate hike of the year.
Investor confidence is deteriorating with more fund managers expecting global growth to weaken over the next 12 months, the worst outlook in a decade, Bank of America Merrill Lynch’s December investor survey showed.
Japan’s Nikkei lost 1.8 percent after U.S. stocks dropped to their lowest in more than a year.
“A large part of the move is due to a broader market sell-off, with both U.S. and Asian equity markets coming under pressure,” said commodities strategist Warren Patterson at Dutch bank ING in Amsterdam.
“Specifically for the oil market, there are no clear signs yet of the market tightening,” he added.
Reuters