Technology Is the rate hike bad news for these 3 stocks?

22:06  12 july  2018
22:06  12 july  2018 Source:   fool.com

BoC rate hike has both pros and cons

  BoC rate hike has both pros and cons The Bank of Canada's latest interest rate hike means higher borrowing costs for consumers with variable-rate mortgages, loans or lines of credit, but it is also good news for savers and future homeowners. The decision to increase its benchmark interest rate to 1.5 per cent on Wednesday prompted all of Canada's Big Six banks to raise their prime rates, thereby passing the rate increase along to their customers.

This article is over 4 months old. Traders on the floor of the New York stock exchange on Monday According to projections released in December, officials expect three rate hikes in 2018 “The era of cheap money is ending, and for markets who got addicted to it, it’s undoubtedly bad news ,” he said.

Importantly, the FOMC signaled that there would be just three rate hikes in 2018, the same number expected during the last Fed meeting Changes in reporting dates and subtle shifts in tone can convey whether good or bad news is coming. These eight stocks reflect the fortunes of a mostly fit sector.

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The Bank of Canada elected to raise the benchmark rate to 1.5% on July 11 — a move that was expected by odds makers and analysts alike. The Canadian dollar predictably rose after the decision was announced, but this was short lived. The United States announced another round of crippling tariffs on China — this time totaling $200 billion — that will likely be officially imposed by the end of the summer. To add to this, President Trump struck an antagonistic tone at the NATO meetings.

Renewed trade tensions and calls for further protectionism pushed up the U.S. dollar, which, in turn, dragged down the Canadian dollar. Governor Stephen Poloz said that there would likely be one more rate hike in 2018, but he also urged caution due to this recent bout of protectionism. Experts forecast that the central bank will leave rates unchanged until a key October meeting.

Bank of Canada expected to raise rate

  Bank of Canada expected to raise rate The Bank of Canada is widely expected to raise its trend-setting interest rate today for the first time in six months. Thanks to stronger economic data, experts are predicting governor Stephen Poloz to hike the rate from its current level of 1.25 per cent.Poloz has followed a cautious, data-dependent approach in recent months and he hasn't touched the rate since raising it in January, a move that came after two earlier increases in the second half of 2017.The central bank's rate decision arrives as Canada faces significant trade-related uncertainties, including stalled NAFTA talks, U.S.

The Fed hiked its key interest rate on Wednesday, surprising no one, while signaling no rush to step up its gradual pace of monetary tightening this year. Try it for .95! More News . Which Stocks Are The Best Mutual Funds Buying? Here's The List.

Military & Defense News . Strategy. Careers. Higher interest rates are supposed to be bad for stocks . But are they now? On Wednesday, the Federal Reserve raised its benchmark rate for the third time in this recovery and signaled that three more hikes are on the way in 2017.

The rate hike may not have been welcomed initially by the companies we will go over today, but continued weakness in the Canadian dollar is not necessarily bad news. Let’s take a look at three stocks investors may want to add after the rate hike today.

Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP)

CP Rail stock was up 1% as of early morning trading on July 12. Shares have climbed 5% in 2018 so far. The company is set to release its second-quarter results on July 18. In the first quarter, revenue rose 4% to $1.66 billion, and the operating ratio rose 510 basis points to 67.5%.

For its 2018 full-year guidance, CP Rail projected the Canadian-U.S. dollar exchange rate to be in the range of $1.25-1.30, while also forecasting an effective tax rate between 24% and 25%. CP Rail and other rail and freight companies have experienced complications with the high Canadian dollar in 2017. Trade tensions are hardly good news, but a higher U.S. dollar should alleviate some pressure going forward.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements. That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

Stocks Dive As Treasury Yield Hits 3 %, Investors Bet On 4 Fed Rate Hikes . Earnings Options: First Republic Sets Up; Is Bad News Priced Into JPMorgan? Bank Stress Tests: Fed Curbs Payouts From Morgan, Goldman.

You're viewing YouTube in Russian. You can change this preference below. Rate hike : Will Bank of Canada now pause until 2018? - Продолжительность: 9:05 CTV News 3 453 просмотра. Here’s How Rising Interest Rates Will Affect the Stock , Bond and Housing Markets - Продолжительность: 3

Canadian National Railway (TSX:CNR)(NYSE:CNI)

Canadian National Railway stock was up 0.96% in morning trading on July 12. Shares are up 7% in 2018 so far. The company is set to release its second-quarter results on July 24.

In the first quarter, Canadian National Railway saw net income drop 16% year over year to $741 million, while diluted earnings per share fell 14% to $1.00. Canadian National Railway sees a large portion of its revenues and expenses denominated in U.S. dollars. The fluctuation of the Canadian dollar was a drag on earnings, and the company said net income would have been $24 million higher, or $0.03 per share, without this issue.

Stella-Jones Inc. (TSX:SJ)

Stella-Jones sells lumber and wood products with a bulk of its customers for utility poles located in the United States. A weak Canadian dollar has historically been a positive for the company. Shares dipped on July 11, and the stock was up a slight 0.19% in morning trading on July 12. The stock is down 5.9% in 2018, but shares are up 8.6% year over year.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements.That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

" Hikes are generally bad for stocks , somewhat bad for the US dollar, and bullish for 10-year yields," Nautilus Investment Research said. Military & Defense News . Strategy. "Will rate hikes derail stocks this time around?

Some analysts fear the Fed may hike rates four times this year, more than the three they have already signaled. "Temporarily, good news may be bad news for the stock market," Price says. The big change in the market mentality is the fear that borrowing rates

All three stocks should benefit from a dovish turn from the Bank of Canada, and trade tensions were able to mitigate the gains the Canadian dollar experienced in the immediate aftermath.

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Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

Poloz widely expected to raise rate this week .
After waiting for half a year, Stephen Poloz appears ready to get back on his rate-hiking path this week. Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level of 1.25 per cent.

Source: http://ca.pressfrom.com/news/technology/-83439-is-the-rate-hike-bad-news-for-these-3-stocks/

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