Bay Street Seen Opening On Cautious Note As Investors Eye Fed Rate Decision

(RTTNews) - The Canadian market is likely to open on a cautious note on Wednesday with investors looking ahead to the Federal Reserve's monetary policy announcement.

The Fed is widely expected to raise interest rate by 50 basis points, after data showed U.S. consumer prices increased at the slowest pace in almost a year in November.

Final data on Canadian manufacturing sales for the month of October is due at 9:00 AM ET.

The Federal Reserve, which is scheduled to announce its monetary policy on Wednesday, is widely expected to raise interest rate by another 50 basis points, but the slower price growth may offset recent worries about future rate hikes.

The Canadian market failed to retain early gains and ended flat on Tuesday. The market rose sharply in early trades after data showing a tamer-than-expected increase in U.S. consumer prices helped ease concerns about the outlook for interest rates.

The Labor Department's report said the consumer price index crept up by 0.1% in November after climbing by 0.4% in October. Economists had expected consumer prices to rise by 0.3%.

The report also showed the annual rate of growth by consumer prices slowed to 7.1% in November from 7.7% in October.

The benchmark S&P/TSX Composite Index, which climbed nearly 330 points in early trade to 20,341.26, ended the session with a gain of 3.76 points or 0.02% at 20,023.46.

Asian stocks closed higher on Wednesday as euphoria surrounding the lower-than-expected inflation readings in the U.S. helped lift sentiment. However, caution ahead of key central bank decisions on interest rates and China's covid caseloads kept the gains in check.

European stocks are down in negative territory with investors largely staying cautious ahead of the Federal Reserve's monetary policy announcement, due later in the day.

In commodities trading, West Texas Intermediate Crude oil futures for January are up $0.56 at $0.74% at $75.95 a barrel.

Gold futures are down $8.40 or 0.46% at $1,817.10 an ounce, while Silver futures are down $0.115 or 0.48% at $23.875 an ounce.