S&P/TSX composite fell for a third straight day on Thursday as world stocks retreated on concern the Federal Reserve might raise interest rates faster than expected.
With little economic data on the horizon, the focus remained on the U.S. central bank’s plans for rates and its plans to cut its balance sheet.
The dollar climbed 0.1 percent as its flight to safety was capped by the latest signals from China on its economic policy.
The loonie strengthened half a percent after the country, the world’s second-largest economy, said it would further reduce down payment requirements on first-time home buyers and tighten restrictions on mortgages.
China’s leaders had been widely expected to put a brake on the nation’s red-hot housing market, especially after home prices in some cities surged 10 percent or more last year.
The S&P 500 ended slightly lower, while the Dow Jones Industrial Average fell 0.5 percent.
U.S. index futures were little changed in premarket trading on the softer tone for stocks seen in a global selloff overnight.
“The first reason has to do with the U.S. economy, and if it does get stronger the Federal Reserve will be in a position where it does want to tighten monetary policy sooner rather than later,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York.
“I wouldn’t be surprised if we have a little pullback of around a percent or so in the equities market before we see some meaningful rally.”
The 10-year Treasury yield hit a one-month high of 2.998 percent as investors continued to bet on tax cuts as political wrangling over the U.S. government’s debt ceiling is due to resume this week.
Analysts said positive economic data from China could slow the pace of increases.
“Investors seem to be in a wait-and-see mood for more clarity about the impact of potential U.S. trade wars on China,” said Scott Shelton, a broker at ICAP in Durham, North Carolina.
Chinese data showed on Thursday exports increased 19.4 percent last month from a year earlier, beating forecasts and helped boost confidence in the world’s second-largest economy.
Data on Tuesday showed unexpected strength in Chinese factory output in June.
The oil market remained under pressure following news U.S. crude stockpiles rose more than expected last week, leading to a larger-than-expected build in crude inventories.
Brent crude oil fell nearly 2 percent, while U.S. crude fell 0.7 percent to below $68 per barrel.
© Thomson Reuters 2019