Market developments
Equities:
The U.S. stock market is poised to extend its decline for a third consecutive session on Friday, with major indices experiencing significant weekly losses. The S&P 500 and Nasdaq suffered their largest weekly declines since April. Technical glitches affecting CrowdStrike and Microsoft have contributed to market volatility, causing significant drops in their stock prices. The market downturn is also influenced by a rotation into smaller, riskier company shares and concerns about tighter U.S. restrictions on chip sales to China.
Fixed income:
The June CPI data was seen as supportive of further monetary easing, with many economists expecting another rate cut from the Bank of Canada (BOC) next week. Economists expect the BOC to focus more on the future trajectory of inflation rather than the latest data, and to emphasize that risks are becoming more balanced between economic downside and inflationary upside. The BOC is expected to announce an additional rate cut on Wednesday and traders are pricing in one more this fall.
Commodities:
Gold prices have experienced a decline for the third consecutive day, retreating from the all-time high reached earlier this week. Gold reached a record price of $2,483.73 an ounce on Wednesday, driven by increased expectations of earlier and deeper monetary easing from the Federal Reserve. Some investors view the recent gains as excessive, leading to the current pullback.