Fed may move to faster rate hike cycle, says analyst

The economic calendar will be light this week in Canada, says Prab Sagoo, associate director at Nasdaq Advisory Services, in his latest weekly update.

Earnings season is coming to a close, with just a handful of companies reporting this week, he notes (those include Couche-Tard, Quebecor and Empire Company Limited). Further, only manufacturing and fourth-quarter balance sheet data is expected.

So, says Sagoo, “the highlight of the week will be the Federal Reserve interest rate announcement on Wednesday. The market expects a rate increase, [and] there are growing expectations that the Fed may move to a faster rate hike cycle due to positive underlying economic data.”

Read: Fed hike on the way, hints Yellen and Fed hike all but sure after U.S. growth of 235k

Following the Fed announcement, meetings are scheduled for the Bank of Japan and Bank of England on Thursday.

Additional highlights

• The TSX ended last week with losses of 0.7%, moving to the lower end of its recent trading range and operating slightly below its 50-day moving average. The losses were driven by resource stocks, as oil lost and energy stocks underperformed, moving into correction territory.
• Further, health stocks gave up February gains and moved back into the red on a year-to-date basis with about 3% losses on the week, while materials and financials were also weak.
• Those declines were tempered by gains in staples, telco and utilities.
• Small caps also underperformed, with commodities down across the board.
• The Canadian dollar weakened to the $0.74 level–its lowest for the year, with the potential to move down further to the $0.72 level in the near term. However, the loonie’s speculative longs continue to grow, given economic domestic economic data has been surprising to the upside. Read: Currency winners and losers for 2017
• Friday will see the S&P and TSX indices rebalance, so expect volatility, heightened volume and elevated block activity.
• Finally, the benchmark will see its first marijuana producer added: Canopy Growth (WEED).

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.