End to Interest rate increases may be close

US and Canadian stock markets climbed in the past two days after the minutes from the last US central bank meeting, which showed that most of the official members favor slowing down interest rate increases. S&P 500 and Nasdaq added 1.73% and 0.91% and Canada’s S&P/TSX added 2.31% in the past five days.

 

The moderation in the tones comes after the latest US inflation report came lower than expected at 7.4%. Consequently, the US dollar is giving up record-high gains against other major currencies, especially Euro and British Pound on a more hawkishness from European central banks. Meanwhile, the Canadian dollar which held the ground strongly against the US dollar throughout the year, became the worst performer among the G10 against the US dollar as the oil prices continue to trend lower.

 

Oil prices disappointed as China hit new levels of covid cases. The all-time high COVID cases in China led to new restrictions that undermined the recent rhetoric to put an end to the zero covid policy. West Texas Intermediate crude oil is currently trading at 78 a barrel.  China’s economic rebound could be a major push for commodity prices including oil and base metals.