(RTTNews) – Canadian stocks inched higher on Wednesday amid the Strait of Hormuz crisis due to a deepening U.S.-Iran conflict while investors assessed the monetary policy released after Bank of Canada’s decision to hold its policy rate at 2.25%.
After opening higher than yesterday’s close, today the benchmark S&P/TSX Composite Index lost momentum early in the session but gained ground later to trade positive through the rest of the session before settling at 35,416.20, up by 95.66 points (or 0.27%).
Six of the 11 sectors posted gains today, with the financials sector leading the pack.
Today, for the sixth consecutive time, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.50% and the Deposit Rate at 2.20%.
Remarking on the current economic scenario, the Bank of Canada’s Governor Tiff Macklem observed that the economy is still grappling due to heightened uncertainty but sounded optimistic when stating officials are confident that the economy will work its way through these headwinds.
Macklem also stated that the governing council is prepared to adjust the policy as required in the future. He added that the current rate is at the right level to bring inflation back to 2.00% and aid in an economic recovery.
Due to the global energy shock due to the U.S.-Iran war, inflation for May month hit 3.20% in May. However, the central bank maintained in its report that if gas prices are excluded from the analysis, inflation remains near the targeted 2.00% range.
The central bank also noted that business houses are finding ways to navigate the uncertainty that has emerged following the need for reviewing the Canada-United States-Mexico Agreement for free trade every year.
On July 1, the U.S. administration refused to extend the CUSMA deal under its current form and instead opted for annual reviews. The deal helped Canadian exporters to bypass the U.S. tariffs.
In the Middle East, the fresh military confrontation between the U.S. and Iran which began after Iran attacked a Cyprus-flagged vessel over the weekend continues.
While Iran asserted its control over the Strait of Hormuz, which it had shut on Monday, U.S. Central Command has offered to escort all ships safely.
U.S. President Donald Trump withdrew his plans to collect a 20% fee for ensuring the safety of ships transiting across the strait. Trump also threatened to wipe out Iran’s bridges and power plants if Iran fails to strike a deal with the U.S. soon.
U.S. Central Command announced concluding a fresh wave of strikes in daylight today. Iran continued to target the U.S. bases in Jordan, Bahrain, Oman, and Kuwait.
As a result of the recent conflict, shipping traffic reduced across the strait, renewing concerns of oil supply disruption.
Data released by Statistics Canada today revealed that the month-on-month manufacturing sales rose 1.30% to a record C$78.10 billion in May, beating market expectations for a 1.10% increase after a 4.20% gain in April.
Major sectors that gained in today’s trading were Financials (1.57%), Communication Services (1.28%), Real Estate (0.68%), Consumer Discretionary (0.64%), Industrials (0.27%), and Healthcare (0.08%).
Among the individual stocks, EQB Inc (9.60%), Manulife Fin (3.10%), Rogers Communications Inc (2.63%), Colliers International Group Inc (5.81%), Bird Construction Inc (13.37%), and Aecon Group Inc (9.06%) were the prominent gainers.
Major sectors that lost in today’s trading were IT (1.77%), Materials (1.24%), Energy (0.45%), Consumer Staples (0.39%), and Utilities (0.05%).
Among the individual stocks, Docebo Inc (3.67%), Blackberry Limited (3.23%), Celestica Inc (2.95%), Altius Minerals Corporation (15.13%), and Trekor Metals Limited (6.44%) were the notable losers.
