Toronto, New York stock markets end flat amid latest U.S. Fed minutes

TORONTO – The latest minutes from the U.S. Federal Reserve did little to move North American stock markets Wednesday, as traders found themselves still looking for more direction on interest rates.

The S&P/TSX composite index in Toronto shed 5.84 points to 14,697.60, with gold and materials stocks being the biggest weights.

New York markets were slightly positive, with the Dow Jones industrial average ahead 21.92 points to 18,573.94, while the broader S&P 500 gained 4.07 points to 2,182.22. The Nasdaq composite added 1.55 points to 5,228.66.

According to minutes from its July meeting, Fed officials hinted that U.S. economic conditions may soon be strong enough to support a rate hike, noting that an increase “was or would soon be warranted.”

The Fed said it was encouraged by a rebound in job growth and also pointed out that financial markets have been stable following a bout of turbulence triggered by Britain’s June 23 vote to leave the European Union.

But a key factor holding it back from making a hike has been the stubbornly slow rate of inflation, which has been running below the central bank’s two per cent target for more than four years, according to the minutes.

The Fed also didn’t give any timeline on when such an increase may happen. Some say it could occur as early as its next meeting in September, while others say it is more likely in December, following the U.S. election.

Analyst Norman Levine said the market’s non-reaction to the Fed minutes confirms that not much was expected out of the release.

“(Fed chair Janet Yellen) is the great procrastinator. She doesn’t seem to want to do anything,” said Levine, managing director at Portfolio Management Corp.

He said the bank’s reluctance has created an environment where stock markets will be shocked if action is ever taken, because it has been lulled into believing it won’t be.

“They’re afraid of being wrong. They’re afraid that the economy is more fragile than it looks. They’re afraid of tipping it into recession,” said Levine.

“(But) that is not going to happen with a 0.25 point or a half point (hike) at all.”

Meanwhile, in currency markets, the Canadian dollar was flat, down 0.02 of a cent to 77.78 cents US.

There was also little movement in commodities. The September crude oil contract rose 21 cents to US$46.79 per barrel while September natural gas was unchanged at US$2.62 per mmBTU.

The December gold contract dropped $8.10 to US$1,348.80 an ounce and September copper contracts fell two cents to US$2.15 a pound.

— With files from The Associated Press

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