Canadian Stocks Move Lower Ahead Of Central Bank Meetings

(RTTNews) - Canadian stocks fell on Monday as investors brace for crucial monetary policy meetings by both the central banks in Canada and the U.S. which will be followed by new interest rate announcements.

After opening just above previous week's close, the benchmark S&P/TSX Composite Index lost ground within an hour and traded lower throughout the rest of the session before closing at 31,169.97, down by 141.44 points (or 0.45%).

Three of the 11 sectors posted gains today with IT sector leading the pack.

On the economic front today, it was an unremarkable day for Canada with no slated releases.

In the U.S., the Federal Open Market Committee of the Federal Reserve convenes tomorrow for a two-day meet, at the end of which the team will announce new interest rates.

A spate of economic releases after the shutdown have given a mixed data on inflation but indicated a cooling job market.

Recently, several Fed governors expressed their support for lowering rate cuts.

In addition, reports indicate that U.S. President Donald Trump has pitched on Kevin Hassett, who is a supporter of a low-interest-rate regime, as the next Fed Chair.

Though expectations of a rate cut are now stronger, traders await with cautious optimism to see which direction the Fed eventually moves.

Investors skipped big trade bets for today to consider later after Wednesday.

Currently, the CME Group FedWatch Tool is indicating an 89.6% chance of a rate cut by the Fed.

Contrary to the U.S, expectations in Canada remain muted for a Bank of Canada rate cut. Economists and traders feel alike that the rates would be held steady by the central bank.

Data released by Statistics Canada on Friday revealed that unemployment rate fell to 6.5% in November (from 6.9% in October) against expectations of an increase to 7%.

While Canada's employment rose by 54,000 (or 0.3%) in November (following a 66,600 increase in October), the average hourly wages for permanent workers rose 4% year-on-year (at C$38.02) in November.

The strong numbers dampened expectations of another rate cut despite the job gains being predominantly in part-time sector.

On Friday, Canadian Prime Minister Mark Carney landed in Washington, D.C., to attend a star-studded ceremony at the Kennedy Center where the matchups for the next year's FIFA tournament were decided at a draw.

Carney met Trump along with Mexican President Claudia Sheinbaum for about 45 minutes.

The details of the meeting have been kept private though the Prime Minister's Office stated that the discussions were "constructive."

After imposing 35% tariffs on Canadian exports to the U.S., Trump abruptly truncated all trade talks with Canada, leaving the Canadian automobile, steel, aluminum, and soft lumber sectors to suffer a lot.

The Canada-U.S.-Mexico Agreement on trade ties (or CUSMA) has insulated Canada and Mexico so far to a larger extent from the effects of U.S. tariffs. However, that agreement is up for a mandatory review next year.

Anxiety has crept after reports stated that the Trump administration may withdraw from the deal altogether.

Apparently, the U.S. may explore options to strike separate bilateral deals with Canada and Mexico. Analysts warned that Trump may tilt the agreement unilaterally to his favor.

In this backdrop, market expectations for a breakthrough news from Washington rose higher. However, the absence of a significant announcement disappointed traders.

Of note, Trump lauded the cooperation between the U.S., Canada, and Mexico at Friday's draw.

Major sectors that gained in today's trading were IT (0.79%), Industrials (0.16%), and Financials (0.11%).

Among the individual stocks, Dye & Durham Ltd (44.24%), Transcontinental Inc (19.07%), Celestica Inc (5.12%), Quarterhill Inc (4.49%), Aecon Group Inc (3.76%), and Fairfax Financial Holdings Ltd (4.73%) were the prominent gainers.

Major sectors that lost in today's trading were Energy (0.93%), Communication Services (1.12%), Materials (1.88%), and Healthcare (2.14%).

Among the individual stocks, Birchcliff Energy Ltd (3.38%), Parex Resources Inc (3.06%), Rogers Communications Inc (1.44%), Curaleaf Holdings Inc (6.60%), and First Majestic Silver Corp (4.42%) were the notable losers.