Market Watch – September 7, 2018
Bank of Canada Leaves Rates Unchanged, Tech Sector Tumbles
The Bank of Canada on Wednesday held its benchmark interest rate steady at 1.5% as it signaled that the fate of NAFTA negotiations could affect the pace of future rate increases. In a brief policy statement, the central bank restated its view that higher rates will be necessary to keep inflation close to its 2% target, bolstering expectations the BoC will next hike the key interest rate by 25 basis points in late October.
Weakness in tech shares weighed on U.S. stocks for the second straight session Thursday, as concerns about regulation and trade continue to hang over the market’s star sector. What was unusual about the selloff was its breadth: hitting not just the social media giants – whose executives were on Capitol Hill to defend their efforts to combat election meddling – but also chip makers, software developers and online streaming services. U.S. government bond prices fell Wednesday in response to a report indicating the U.K. and Germany had abandoned key demands on Brexit—something that analysts suggested could potentially ease the way to a deal and diminish the safe-haven appeal of Treasuries.
Meanwhile, the U.S. trade deficit posted its biggest monthly increase in almost three and a half years in July, as a booming domestic economy raised imports while exports were restrained by trade conflicts and slowing global growth. One factor behind the July gap: U.S. exports of soybeans fell dramatically due to China’s retaliatory tariffs against the U.S. Finally, oil prices fell Wednesday – after spiking Tuesday – as tropical storm Gordon failed to develop into a major problem for U.S. Gulf Coast refineries