Market Watch: March 10

U.S. equity markets finished mixed on Wednesday as investors considered how high rates would go based on comments from U.S. Fed Chair Jerome Powell. The Dow lost 58 points by the close, while the S&P 500 gained 6 and the Nasdaq rose 46 points, respectively. In Canada, the TSX saw a 71-point gain as the Bank of Canada held its rate steady for the first time in nine meetings.

On Thursday, North American equity markets dropped ahead of the U.S. payroll data on Friday, which may give clues to the U.S. Federal Reserve Board’s aggressiveness at its next meeting. By the end of trading, the Dow lost 544 points, while the S&P 500 and Nasdaq dropped 74 and 238 points, respectively. In Canada, the TSX fell 260 points, dragged down by the Health Care sector.

North American Indexes lose ground

For the four trading days covered in this report, the Dow lost 1136 points to close at 32,255, the S&P 500 dropped 127 points to settle at 3,918, and the tech-heavy Nasdaq fell 351 points to close at 11,338. In Canada, the TSX dropped 495 points to end at 20,087.

Strategy

Bank of Canada (BoC) paused its rate hike

The BoC left its policy rate unchanged from the 25 basis points (bps) increase in its last Governing Council meeting in January. The Governing Council will continue to assess economic developments and the impact of past interest rate increases. This is in line with some comments from Governor Tiff Macklem saying that it would be a mistake to wait until inflation is down to two per cent to stop hiking. If needed, the BoC is prepared to increase the policy rate further to return inflation to the two per cent target. The higher rates continue to weigh on household spending, and business investment has weakened in conjunction with slowing domestic and foreign demand.

Meanwhile, the labour market remains very tight, the unemployment rate continues near historic lows, and job vacancies are elevated. Therefore, wages continue to grow from four to five per cent. However, inflation eased to 5.9 per cent in January, but price increases for food and shelter remain high. The BoC expects weak economic growth will pressure the labour markets to ease, moderating wage growth and making it more difficult for businesses to pass on higher costs to consumers. Overall, the press release says that the latest data remains in line with the Bank’s expectation that Consumer Price Index (CPI) inflation will come down to around three per cent in the middle of this year.

_Disclaimer

_{This report is provided to you for informational purposes only and is not intended to provide personal investment advice. This report does not include or constitute an investment recommendation and does not take into account the particular investment objectives, financial conditions, or specific needs of individual clients. Any statements regarding future prospects may not be realized. Before acting on this material, you should consider whether it is suitable for your particular circumstances and talk to your investment advisor. The author(s) of the report and the supervisors of the Global Portfolio Advisory Group may own securities of the companies included herein. Scotia Capital Inc. is what is referred to as an “integrated” investment firm since we provide a broad range of corporate finance, investment banking, institutional trading and retail client services and products. As a result, we recognize that there are inherent conflicts of interest in our business since we often represent both sides to a transaction, namely the buyer and the seller. While we have policies and procedures in place to manage these conflicts, we also disclose certain conflicts to you so that you are aware of them. Please note that we may have, from time to time, relationships with the companies that are discussed in this report. The Global Portfolio Advisory Group prepared this report by analyzing information from various sources. Information obtained in the preparation of this report may have been obtained from the Equity Research and Fixed Income Research departments of the Global Banking and Markets division of Scotiabank. Information may be also obtained from the Foreign Exchange Research and Scotia Economics departments within Scotiabank. In addition to information obtained from members of the Scotiabank group, information may be obtained from the following third-party sources: Standard & Poor’s, Morningstar, Bloomberg, Credit Suisse AG, Perimeter Markets Inc., and FactSet. The information and opinions contained in this report have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. While the information provided is believed to be accurate and reliable, neither Scotia Capital Inc., which includes the Global Portfolio Advisory Group, nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Neither Scotia Capital Inc. nor its affiliates accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained in this report, if any, is based on certain assumptions and analysis of information available at the time that this information was prepared, which assumptions and analysis may or may not be correct. There is no representation, warranty or other assurance that any projections contained in this report will be realized. Opinions, estimates and projections contained herein are those of the Global Portfolio Advisory Group as of the date hereof and are subject to change without notice. For that reason, it cannot be guaranteed by The Bank of Nova Scotia or any of its subsidiaries, including Scotia Capital Inc. This report is not, and is not to be construed as: (i) an offer to sell or solicitation of an offer to buy securities and/or commodity futures contracts; (ii) an offer to transact business in any jurisdiction; or (iii) investment advice to any party. Products and services described herein are only available where they can be lawfully provided. Scotia Capital Inc. and its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts mentioned herein as principal or agent. Trademarks are the property of their respective owners. Copyright 2023 Scotia Capital Inc. All rights reserved. This report is distributed by Scotia Capital Inc., a subsidiary of The Bank of Nova Scotia. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. ® Registered trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management® consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. Private banking and International private banking services are provided in Canada by The Bank of Nova Scotia. Estate and trust services are provided by The Bank of Nova Scotia Trust Company. Portfolio management is provided by 1832 Asset Management L.P. and 1832 Asset Management U.S. Inc. Insurance services are provided by Scotia Wealth Management Insurance Services Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. International investment advisory services are provided in Canada by Scotia Capital Inc. Financial planning services are provided by The Bank of Nova Scotia, 1832 Asset Management L.P., and ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Scotia Wealth Insurance Services Inc. is the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank group of companies. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Insurance Agents (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc.Scotia Wealth Management consists of a range of financial services provided, in The Bahamas, by Scotiabank (Bahamas) Limited and The Bank of Nova Scotia Trust Company (Bahamas) Limited. International private banking services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas. International investment advisory services are provided in The Bahamas by Scotiabank (Bahamas) Limited, an entity registered with The Securities Commission of The Bahamas. International wealth structuring solutions are provided in The Bahamas by The Bank of Nova Scotia Trust Company (Bahamas) Limited, an entity registered with The Central Bank of The Bahamas. Scotia Wealth Management consists of international investment advisory services provided, in Barbados, by The Bank of Nova Scotia, Barbados Branch, an entity licensed by the Barbados Financial Services Commission. Scotia Wealth Management consists of a range of financial services provided, in the Cayman Islands, by Scotiabank & Trust (Cayman) Ltd. International private banking services, international investment advisory services and international wealth structuring solutions are provided in the Cayman Islands by Scotiabank & Trust (Cayman) Ltd., an entity licensed by the Cayman Islands Monetary Authority. Scotia Wealth Management consists of international private banking services provided, in Peru, by Scotiabank Peru S.A.A, an entity supervised by the Peru Superintendence of Banking and Insurance. Scotia Wealth Management® in Chile consists of services provided by Scotiabank Chile (Bank), Scotia Corredora de Bolsa Chile Limitada (Brokerage) and Scotia Administradora General de Fondos Chile S.A. (Asset Management), entities supervised by the Comisión para el Mercado Financiero de Chile (Financial Market Commission). ® Registered trademark of The Bank of Nova Scotia, used under license.}

by Scotia Wealth Management - The Zukiwsky Group

Market Watch: March 10

What's Trending