TSX Down 175 Points on Lower Commodities Ahead of US Fed Rates Update

The TSX is down 175 points at midday with telecoms (+0.43%) the sole gainer.

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The biggest decliners are energy (-3.7%) and miners (-2%). TC Energy (TRP.TO), is down near 7.5% after providing an update on the Coastal GasLink pipeline warning of significant cost overruns. Close to 3.6 million shares haver been traded, making it the third most active on the TSX.

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Investors appear to be taking a more cautious approach to U.S. financial assets ahead of today’s FOMC policy announcement at 2pm and Chair Powell’s press conference at 2.30pm ET. The Fed is expected to raise rates by 25 bps, from the 50 bps hike in December and four 75 bps hike before then.

In the policy statement, BMO says it will be watching for any tweak to the current forward guidance, that “ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time”. According to BMO, it’s the key word “ongoing” that could be modified to reflect a “less ardent and more data-dependent approach to tightening, and it’s a coin flip whether we get a tweak.”

In the press conference, BMO will look for Chair Powell to explain why a slower rate hike cadence was warranted along with why rates will still likely rise further. “So,” BMO asked, “where is the terminal rate?”

Also not helping investor sentiment with the US earnings season well underway and the Canadian earnings season about to hot up, Howard Silverblatt, Senior Index Analyst at S&P Global, said “earnings ain’t good, But they ain’t that bad.” He added while the actual Q4 bottom-line results weren’t good, they weren’t as bad as whispered (or feared), with Q4 expected to end 2.7% above Q3 2022 (even as it was down 8.8% from the record Q4 2021).

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