US economy able to withstand further pain

North American equities recouped part of the early session losses on Wednesday. At the same time, investors assess the robust economic data that will increase the chances of the US Fed continuing with its hawkish tone. S&P 500 added 0.17%, snapping its five-day losing streak, while tech-heavy Nasdaq lost 0.26%. Canada"s S&P/TSX dropped 1.06% as oil prices continued sliding.

 

The solid US manufacturing report and lower-than-expected unemployment show that the US economy is resilient and able to withstand the higher rates. Central bank officials can introduce another 0.75% increase in interest rates in their next meeting. Several officials reiterated their determination to continue the contractionary monetary policy to curb inflation and bring it back to the 2% target. Investors are awaiting the US nonfarm payrolls report on Friday as another economic indicator.

US and Canadian dollars continue to be the best-performing significant currencies. The Canadian dollar is holding its firm ground despite the sliding oil prices. West Texas Intermediate crude oil dropped to 86 a barrel on Wednesday.

 

Elsewhere, China"s lockdown on the megacity Chengdu has introduced another risk factor for global economic growth. The political risks stemming from the Russia-Ukraine conflict lingers, and now tension between China and Taiwan mounts with Taiwan"s latest shooting down of a Chinese civilian drone.