CANADA STOCKS-TSX futures subdued as rate cut bets decline

BY Reuters | ECONOMIC | 05/17/24 07:35 AM EDT

Dec 27 (Reuters) - Futures for Canada's main stock index were little changed on Friday after interest rate cut bets came under pressure due to tight labour market data in the U.S., while higher commodity prices are expected to lift the market.

June futures on the S&P/TSX index were down 0.1% at 6:58 a.m. ET (10:58 GMT). The index looks set for a weekly decline.

Data this week showed a cooling U.S. consumer price index, prompting market participants to swiftly price in at least two rate cuts this year. However, Federal Reserve officials saying rates may need to stay higher for longer and a report showing a tight labour market have led to another shift in expectations.

Markets are now fully pricing in one U.S. rate cut in November, with a 68% chance of a cut in September - down from 73% after the softer U.S. inflation data.

Meanwhile, investors expect the Bank of Canada to begin rate cuts in June or July, with next Tuesday's inflation reading as a key input.

The energy and materials sectors are expected to move up, supported by a rise in commodity prices.

The Toronto Stock Exchange's S&P/TSX composite index ended up 15.07 points, or 0.1%, at 22,299.83 on Thursday.

Dow e-minis were down 0.03% at 6:58 a.m. ET, while S&P 500 e-minis were down 0.02% and Nasdaq 100 e-minis were 0.07%.

COMMODITIES AT 6:58 a.m. ET

Gold futures: $2,389.9; +0.2%

US crude: $79.4; +0.2%

Brent crude: $83.47; +0.2% ($1= C$1.3639) (Reporting by Khushi Singh in Bengaluru; Editing by Ravi Prakash Kumar)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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