Toronto stock market’s Composite Index fell, as U.S. stock markets rose Friday despite the high U.S. inflation numbers showing that the Federal Reserve will raise rates further this year.
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“We’re watching the futures markets that are indicating traders are going to expect the Fed to continue to hike rates in Q2,” said Martin Sellner, managing director of Portfolio Management Corporation.
“The market is telling us if the Fed doesn’t start to talk about slowing down the pace of the rate hikes, the Fed will be facing a very complicated issue as inflation expectations start to rise.”
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The March index dropped 17.88 points, or 0.09 per cent, to 11,771.45, while the S&P/TSX Venture composite index rose 8.74 points, or 0.11 per cent, to 1,477.24.
The loonie remained above the 70-cent mark for most of the day. It closed at a two-month high of $70.30 against the greenback.
At home, U.S. stock markets rose slightly as the market digested U.S. inflation numbers that jumped to 3 per cent, up from February’s 2.9 per cent.
At midday on the Toronto Stock Exchange, the S&P/TSX composite index was down 17.88 points, or 0.09 per cent, to 11,771.45.
READ MORE: North American stock markets climb as inflation fears ease slightly
Cairo Capital Markets said international equities were expected to pull back from recent record highs as investors fret about the strong U.S. economy.
The March manufacturing index in China jumped 8.1 points to 52.9, up from the 50.2 reading in February. The 51.7 reading in Germany was unchanged from February. The index in France rose slightly from a February reading of 56.7.
Financial markets watch closely for Chinese and German data because both were slowing when the European Central Bank and the Bank of Japan raised interest rates, further reducing the money available for investment, according to Morningstar.
“When that money flow is no longer there, it’s going to leave the countries and push their currencies higher, and that will make exports less competitive than before.”
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