FX.co ★ TSX Struggles for Direction After BoC Decision

The S&P/TSX Composite Index lingered around the 31,250 level on Wednesday as investors assessed the latest decision and future direction from the Bank of Canada, while also anticipating the upcoming meeting of the US Federal Reserve. It was widely expected that the Bank of Canada would maintain its policy rate at 2.25% following two previous reductions, suggesting a steady approach and reducing the likelihood of additional economic stimulus. The Council had previously indicated in October that the current policy rate was generally suitable. Assuming inflation and economic activity align with their October projections, the Council believes the rate should help maintain inflation near the 2% target while continuing to support economic growth. However, they are prepared to adjust if circumstances change. Concurrently, market sentiment anticipated a possible 25 basis point rate cut by the Federal Reserve, which contributed to softer US yields and alleviated some pressure on risk assets. The decline in the index was primarily driven by commodity producers, with companies like Agnico Eagle and Canadian Natural experiencing declines of approximately 2% as both gold and oil prices fell. Conversely, the financial sector provided some support, with stocks like TD and CIBC rising by approximately 1%.