By Bill Curry
Inflation Concerns Weighing on Investor Sentiment
U.S. inflation hit an important milestone early this week. Data released Monday showed the Commerce Department’s price index for personal-consumption expenditures was up 2% from a year earlier in March, the first time in more than a year it was on target. Despite the news, the Federal Reserve on Wednesday held interest rates steady, leaving it on track to raise borrowing costs in June. While the Fed’s latest announcement has eased some short-term concerns, the threat of higher rates moving forward remains in focus.
Also in focus this week were fears of a looming trade war with Europe (and Canada and Mexico) over U.S.-imposed steel tariffs. Concerns were eased somewhat when the U.S. administration extended its tariff exemptions until June 1.
Meanwhile, U.S.–China trade talks began this week in Beijing to negotiate a resolution of U.S. complaints over a variety of issues, including subsidies and limitations on foreign investment. In Canada, data showed that the economy surged in February. Statistics Canada reported that real GDP rose 0.4% month over month, the strongest one-month growth since last spring, following a decline of 0.1% in January.
Meanwhile, record-high household debt in Canada is keeping the BoC cautious about the timing of its next interest rate hike. The roughly $2-trillion of debt Canadian households are carrying has made the economy much more sensitive to higher interest rates than it has been in the past. Turning to Europe, the eurozone economy slowed in the first three months of this year, dampening hopes of another year of strong growth. Uncertainty about the economy is likely to weigh on the ECB’s next big decision over when and how to end its bond-buying stimulus program.
Investor fears over inflation weighed on North American benchmarks. For the four days covered in this report, the Dow dropped 381 points to close at 23,930, the S&P 500 was down 40 points to end at 2,630, and the Nasdaq declined 32 points to settle at 7,088. The TSX followed the downward trend, shedding 47 points to finish at 15,621.
This publication has been prepared by ScotiaMcLeod, a division of Scotia Capital Inc. (SCI). This publication is intended as a general source of information and should not be considered as personal investment or tax advice. We are not tax advisors and we recommend that individuals consult with their professional tax advisor before taking any action based upon the information found in this publication. Opinions, estimates, and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein 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. Neither SCI nor its affiliates accepts liability whatsoever for any loss arising from any use of this publication or its contents. This publication is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any securities and/or commodity futures contracts. SCI, 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. SCI and/or its affiliates may have acted as financial advisor and/or underwriter for certain of the corporations mentioned herein and may have received and may receive remuneration for same. All insurance products are sold through Scotia Wealth Insurance Services Inc., the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank Group. When discussing life insurance products, ScotiaMcLeod advisors are acting as Insurance Advisors (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc. This publication and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusions contained in it be referred to without in each case the prior express consent of SCI.
Local families enjoy Spring on the Farm at Sunnybrook
It was a day filled with sunshine, baby animals, tractors, trains and children at Sunnybrook Farm...
READ MORE +
Big 105 and The Drive Garage Sale nets over $2,500 for Ronald McDonald House of Central Alberta
Local garage salers helped out a great cause and made off with some sweet deals at the Big 105 and...
READ MORE +
UPDATED: Driver arrested after stolen truck crashes into SUV on Taylor Drive
A serious collision has halted traffic on Taylor Drive Friday evening. RCMP and Emergency Services...
READ MORE +
Join the Discussion
We are happy to provide a forum for commenting and discussion. Please respect and abide by the house rules: Keep it clean, keep it civil, keep it truthful, stay on topic, be responsible, share your knowledge, and please suggest removal of comments that violate these standards. See full commenting rules.