Weak commodity prices suggest a softer opening for Canadian stocks on Thursday. However, bargain hunting following the previous session's significant decline might help mitigate market losses, potentially boosting prices for some heavily hit stocks.
Anticipation surrounds the Canadian retail sales report for October, expected to be released on Friday. According to flash estimates, retail sales are projected to have increased by 0.7% from the previous month. In September, retail sales in Canada saw a year-on-year rise of 0.8%, following a 1.4% increase in August. On a monthly basis, retail sales climbed by 0.4% in September, an upward revision from the preliminary estimate of 0.3%.
Data regarding average weekly earnings for October is expected at 8:30 AM ET.
On Wednesday, Canadian equities experienced a pronounced sell-off, with the benchmark S&P/TSX Composite Index dropping to a six-week low. Political uncertainties combined with tariff war concerns led to a bearish sentiment in the market.
The sell-off intensified late in the afternoon after the Federal Reserve indicated fewer interest rate cuts for the coming year than previously anticipated. Although the Fed reduced interest rates by 25 basis points as most had expected, their latest projections indicate that rates could be between 3.75% and 4% by the end of 2025, compared to the 3.25% to 3.5% range forecasted in September.
The S&P/TSX Composite Index concluded at 24,557.00, declining by 562.71 points, or 2.24%, marking one of the largest single-session drops in recent months.
Asian markets closed weaker on Thursday in response to the U.S. Federal Reserve's caution regarding further interest rate cuts amidst inflation concerns.
Meanwhile, European stocks are firmly in negative territory today. This follows the Fed's rate cut on Wednesday and its forecast of only two reductions for 2025, fewer than four anticipated in September. Additionally, the Bank of England maintained its rates, as expected, after an increase in the nation's inflation to an eight-month high in November.
In commodities, West Texas Intermediate crude oil futures have decreased by $0.17 or 0.25%, settling at $70.41 per barrel. Gold futures have fallen by $25.10 or 0.95%, priced at $2,628.20 per ounce, while silver futures are down by $0.810, or approximately 2.7%, at $29.930 per ounce.
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