Canadian Stocks Showing A Lack Of Direction

Canadian stocks have shown a lack of direction over the course of the trading session on Tuesday, with the benchmark S&P/TSX Composite Index bouncing back and forth across the unchanged line.

Currently, the S&P/TSX Composite Index is down 3.91 points or less than a tenth of a percent at 21,251.70 after inching up to its best closing level in well over a year last Friday.

The choppy trading on the day comes as traders seem reluctant to make significant moves ahead of the release of the minutes of the Federal Reserve’s latest monetary policy meeting on Wednesday.

“The minutes of the Federal Reserve’s January Federal Open Market Committee meeting may clarify how much more ‘good data’ the Fed’s policymakers want to see before starting to reduce interest rates,” said Bill Adams, Chief Economist for Comerica Bank.

He added, “Chair Powell said at the press conference following the January decision that he saw a March cut as unlikely, but was uncharacteristically vague about exactly what the Fed’s preconditions for cuts are; this suggests FOMC members still disagree about the issue.”

Ahead of the release of the minutes, CME Group’s FedWatch is currently indicating just an 8.5 percent chance the Fed will lower rates by a quarter point in March.

Reflecting the lackluster performance by the broader market, most of the major sectors are showing only modest moves on the day.

Consumer staples stocks have shown a strong move to the upside, however, with the S&P/TSX Capped Consumer Staples Index climbing by 1.5 percent.

On the other hand, technology stocks are seeing notable weakness, dragging the S&P/TSX Capped Information Technology Index down by 1.2 percent.

Statistics Canada released a report this morning showing its Consumer Price Index rose 2.9 percent on a year-over-year basis in January, down from a 3.4 percent gain in December. On a seasonally adjusted monthly basis, the CPI edged down 0.1 percent in January.

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