Bank of Canada cuts key rate for first time in more than 4 years
The Bank of Canada announced Wednesday that it’s cutting its key interest rate by a quarter of a percentage point to 4.75 per cent.
Canada's main stock index lost ground in the final day of trading in July as some commodities dropped, but North American stock markets in general finished the month with positive numbers.
Pierre Cleroux, VP of Research and Chief Economist for the Business Development Bank of Canada, said Amazon Inc. announced it missed its sales targets for the quarter, which stoked concerns that the next quarter may not be as prosperous for equity markets as the previous one.
“They didn't miss it by much, but people are kind of worried that the tech companies, which performed very well through the pandemic, are probably not going to be as good for growth in the next few months as before,” said Cleroux.
The S&P/TSX composite index was down 23.98 points at 20,287.80.
In New York, the Dow Jones industrial average was down 149.06 points at 34,935.47. The S&P 500 index was down 23.89 points at 4,395.26, while the Nasdaq composite was down 105.58 points at 14,672.68.
“To put it into perspective, all the markets are down, but they're slightly down,” said Cleroux.
“The Nasdaq is still 1 per cent up for July, the Dow is 1.5 per cent up, so despite the fact today was not a good day, overall over the month, this has been positive.”
Cleroux said the concerns over U.S. tech stocks had implications in Canada too, especially for Canadian tech companies like Shopify Inc., which lost 1.39 per cent of its value in trading today.
As earnings season continues, Cleroux said the second quarter of 2021 has been positive for most companies, which benefitted from reopenings as COVID-19 vaccines were widely distributed.
Restaurant Brands International Inc. reported a strong second quarter today, beating estimates from analysts with solid earnings. The Toronto-based company's stock was up 5.42 per cent as a result.
Cleroux said Enbridge Inc. also reported a strong second quarter, although their stock still declined slightly by 0.55 per cent as a result of more concerns over oil and gas demand.
The September crude oil contract dipped mid-day, but closed up 33 cents cents at US$73.95 per barrel. The September natural gas contract was down 14.5 cents at US$3.914 per mmBTU.
As the Delta variant of COVID-19 continues to spread in the U.S. and Europe, Cleroux said oil prices continue to be in question as the danger of economic restrictions looms.
Metals also suffered losses today, with the December gold contract down US$18.60 at US$1,817.20 an ounce and the September copper contract down 4.1 cents at nearly US$4.48 a pound.
The substantial drop in gold comes after a larger rise on Thursday. Cleroux said the drop was largely due to people selling their assets after making profits Thursday, and to other market effects.
The Canadian government also released its GDP report for May, reporting a 0.3 per cent contraction for the month.
However, Cleroux said it was a mixed message since the government is also estimating 0.7 per cent growth for June, as that month will take into account when COVID-19 lockdowns were lifted.
He also expects a positive report for July, since that was the month that provinces like Alberta opened almost entirely without restrictions.
“We knew May was going to be negative because a lot of provinces had to introduce restrictions on the economy,” said Cleroux.
“We expect the rest of the year to be really good.”
The GDP news did not have a significant effect on the Canadian dollar, which traded for 80.24 cents US, compared with 80.32 cents US on Thursday.
Cleroux attributed the drop mostly to the drop in commodity prices Friday.
This report by The Canadian Press was first published July 30, 2021.
The Bank of Canada announced Wednesday that it’s cutting its key interest rate by a quarter of a percentage point to 4.75 per cent.
McMaster Children’s Hospital is pausing scheduled tonsil and adenoid surgeries for patients under the age of 18 after officials say two pediatric patients who underwent the procedure died shortly after being discharged.
Boeing launched astronauts for the first time Wednesday, belatedly joining SpaceX as a second taxi service for NASA.
While a growing number of Americans may be considering moving north to Canada to escape Donald Trump, an immigration lawyer says few will actually qualify to live and work here.
An Italian court reconvicted Amanda Knox of slander Wednesday, quashing her hope of removing a legal stain against her that has persisted long after her exoneration in the brutal 2007 murder of her British roommate while the two were exchange students in Italy.
It was Conservative Leader Pierre Poilievre’s birthday on Monday, but he could've probably done without the package that one of his more obscure backbenchers dropped on his doorstep, writes former NDP leader Tom Mulcair in his latest column for CTVNews.ca.
If you've managed to catch a glimpse of the auroras this spring, you may be wondering what they have to do with the sun, and why they seem to be happening more than usual lately.
The co-owner of a dog named Peanut has been ordered to return the pet to their ex after a custody dispute was heard by B.C.'s small claims tribunal.
A New Hampshire man has been sentenced to 40 years to life in prison for fatally stabbing his mother after the two had argued about the volume on the video games he was playing.
A Cape Breton is this year's recipient of the McEuen Scholarship, which gives him basically a full ride to the medical school at the University of St. Andrews in Scotland.
Mounties in Kelowna nabbed a would-be burglar with an apparent sweet tooth over the weekend.
When Alyssa Anklewich’s history teacher assigned her Westwood Collegiate class an essay about D-Day, the 15-year-old had other ideas.
Many people are familiar with the benefits of being in nature, but forest therapy goes a step further than a simple walk in the woods.
The Stanley Cup was passing through town Friday, and Lanny Legend took it upon himself to take it for a surprise visit.
Car 14 is a luxury passenger car that once made regular runs from London to Port Stanley starting in 1917.
A hefty donation by a renowned local activist to the University of Winnipeg has created what is believed to be the most comprehensive two-spirit archives in all of Canada.
Leanne Van Bergen discovered a skulk of 10 baby foxes, and two mothers, had made themselves at home on her property in Beausejour.
An 81-year-old Waterloo, Ont. woman thought she’d never ride a horse again after a brain bleed led to severe physical complications.