Canada’s main stock index was lower on Wednesday after the Bank of Canada reduced its key overnight interest rate to 2.25 per cent on Wednesday, as widely expected, and signaled this could mark an end to its cutting cycle unless the outlook for inflation and economy changed.
At 9:46 a.m. ET, Toronto’s S&P/TSX composite index was down 66.23 points, or 0.22 per cent, at 30,353.45 with investors turning their attention to a decision from the U.S. central bank later in the day.
The 25 basis point cut, the second in row, brings down the rate to the lowest since July 2022.
Governor Tiff Macklem said the easing was designed to help the economy deal with the disruption done by U.S. tariffs while keeping inflation close to the bank’s 2-per-cent target.
In January the bank had forecast the economy would grow by 1.8 per cent in both 2025 and 2026. But citing U.S. trade policy, it now says growth in 2025 will be just 1.2 per cent, dropping to 1.1% in 2026, before recovering to 1.6 per cent in 2027.
Later at 2:00 p.m. ET, the Fed is expected to implement a similar 25-basis-point rate reduction, guiding the U.S. economy with limited economic data following nearly a month of government shutdown.
Wall Street opened just short of fresh records on Wednesday as Nvidia hits a US$5-trillion valuation, while investors awaited an expected Federal Reserve rate cut and a wave of Big Tech results.
The Dow Jones Industrial Average rose 103.21 points, or 0.25 per cent, to 47,809.58, the S&P 500 gained 16.90 points, or 0.24 per cent, to 6,907.66 and the Nasdaq Composite gained 157.50 points, or 0.66 per cent, to 23,984.99.
Shares of Nvidia rose 3.5 per cent in early trading after CEO Jensen Huang announced US$500-billion in AI chip orders and plans to build seven supercomputers for the U.S. government.
The stock has jumped about 50 per cent so far this year, and been among the top boosts to U.S. equities in 2025. Apple briefly topped US$4-trillion in market cap on Tuesday, while Microsoft trades above that level.
“Nvidia has an undeniably strong position in the AI chipset market and deals with a range of firms. Investors continue to enthuse about the AI theme and remain fascinated by the rate of spending,” said Russ Mould, investment director at AJ Bell.
The three major indexes have hit a series of record highs in recent days, driven by optimism around artificial intelligence, positive earnings momentum and expectations of rate cuts from the U.S. central bank.
Alphabet gained 0.8 per cent, with Meta and Microsoft up over 0.3 per cent each, as they head into post-close earnings.
Market participants will seek justification for Big Tech’s towering valuations, with particular focus on whether heavy AI spending is likely to continue or not.
Meanwhile, Boeing fell nearly 2.5 per cent after the planemaker reported a charge of nearly US$5-billion related to delays in its 777X jet program, while Caterpillar shares rose 9 per cent after beating third-quarter profit expectations.
With results in from 180 of the S&P 500 companies, third-quarter earnings are estimated to have increased 10.5 per cent from the year-ago period, above earlier estimates for the quarter, according to data compiled by LSEG as of Tuesday.
The Fed is widely expected to trim rates by a quarter of a percentage point later in the day.
After nearly a month of a U.S. government shutdown that has kept key economic data under wraps, investors will hunt for clues on the Fed’s rate path after leaning on private surveys and corporate announcements to fill the void.
Investors will also keep an eye on any plans to end the central bank’s “quantitative tightening” policy – a long-running effort to shrink its balance sheet.
Traders expect another quarter-point cut in December.
Meanwhile, U.S. President Donald Trump began the final leg of his Asia trip, saying he had reached a deal with South Korea and was optimistic about an agreement with China’s Xi Jinping. Talks between the two counterparts are set for Thursday in the port city of Busan.
Oil prices rose as traders were optimistic about the U.S.-China meeting. Brent crude futures were up 0.6 per cent at $64.78 a barrel, while U.S. crude was up 0.6 per cent at $60.49 a barrel.
Safe-haven gold traded at $4,016.31 an ounce.
Reuters
