TORONTO, Jan 22 (Reuters) - Toronto’s main stock market, which suffered its biggest drop in more than seven years in the previous session, could fall further on Tuesday if the U.S. market takes a plunge.
But the retreat isn’t expected to be as steep as Monday after the U.S. Federal Reserve surprisingly slashed its key interest rate by 75 basis points in a bid to contain the damage to the economy.
“The Fed has put a little bit of juice into the market and psychologically, I think it is a good move,” said Fred Ketchen, director of equity trading at ScotiaMcLeod.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE begins the day at 12,132.13 after dropping 604.99, or 4.75 percent, on Monday as it was sucked into a global equities tailspin on worries about the impact of a possible U.S. recession.
U.S. markets were closed for Martin Luther King Day on Monday, so on Tuesday, investors have been expecting the closely watched Dow Jones industrial average .DJI to lead the charge lower as it plays catch up with the global markets. ($1=$1.03 Canadian) (Reporting by Scott Anderson; editing by Janet Guttsman)