S&P/TSX Composite index (OSPTX) Fed Interest Rate Hike in March in Doubt

The S&P/TSX Composite index (INDEXTSI:OSPTX) higher close yesterday on an improving oil outlook may be jeopardized today should the Fed adhere to its plan to raise rates by a quarter of a percent at its March meeting. While the consensus is that the Fed will pause its policy launched in December of raising rates toward a full percentage point, the outcome is far from certain. There is however good reason to expect that their absence of movement will be perceived by the market as a tacit admission of starting the rate hike process too early.

The SSE Composite Index (SHA:000001) in Shanghai closed down half a percent to 2,735.56 as oil persisted in a range between $30.20 and 30.80 for much of the session, and the economic picture for China remained bleak.

Gold’s continuing strong performance is indicative of a widespread perception that it may now be perceived as the ‘safe haven’ asset globally, since the U.S. Dollar’s future is clouded by the Fed’s inability to keep it from rising against other currencies uncontrollably. Already, Canada is facing a recession as the combined influence of a severely contracting mining and oil and gas industries drive unemployment higher – especially in the western provinces.

The question as to whether or not the situation will evolve to finally cause prices to reverse in Canada’s perennially overheated real estate market remains to be seen.

In general markets are expected to open lower today and will likely remain relatively quiet until the FOMC announcement this afternoon at 2 pm Eastern Time. New home sales figures are expected at 10 a.m. ET this morning as well.

Star performers yesterday included Pengrowth Energy Corp (TSE:PGF), whose shares rose by 15 percent yesterday to close at $0.90 on volume of over 3 millions shares traded, and Bonavista Energy Corp (TSE:BNP).

Growth in world trade is slowing
as the slump in commodity prices and a faltering economy in
China combine to restrict shipments of manufactured items and
raw materials around the globe.

World trade volumes rose by just 1.5 percent in the three
months between September and November compared with the same
period a year earlier, according to the Netherlands Bureau of
Economic Policy Analysis.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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