Canadian stocks to wobble after Bank of Canada rate cut

Royal Bank of Canada towers at the southwest corner on Wellington St. and Bay St. in Toronto

Canadian bank stocks might experience some temporary weakness following the Bank of Canada announced of another 25 basis point rate cut on Wednesday.

John Aiken, analyst at Barclays Capital Markets, said share prices for the “Big 6” underperformed the broader market after the BoC’s surprise 25 basis point rate cut in January, with valuations dropping seven per cent on average once the country’s biggest banks followed partial suit and lowered their prime lending rates by 15 basis points.

He thinks a similar dip might happen again even though the central bank’s latest move was largely expected.