Canada’s main stock index on Tuesday ended the trading day at its highest in more than a week, led by tech, consumer and financial stocks, after soft U.S. inflation data maintained hopes for a September rate cut by the Federal Reserve.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 219.85 points, or 0.98%, at 22,618.18.
The U.S. producer prices index rose less than expected to 0.1% in July, while it moderated to 2.2% on a yearly basis, an indication that inflation pressures continued to moderate.
Analysts said they are looking forward to Wednesday’s consumer price index (CPI) data in the U.S. that could indicate if a September rate cut is on the cards.
“Investors are looking at every data point to gauge whether the North American economy is slowing down, and on that note economic growth rather than inflation is the biggest investor concern right now,” said Elvis Picardo, senior portfolio manager with iA Private Wealth Inc.
The bump in TSX was driven by the information technology and financials sector, which were the top gainers, adding 2.4% and 1.39%, respectively.
Sun Life Financial closed at 4% after the life insurance firm beat second-quarter profit estimates, strengthening the financial sector.
The energy sector closed up 0.3%, even as oil prices lost ground.
Healthcare stocks also closed up 0.4%.
Data readings this week in the U.S. are in the limelight with the CPI numbers due on Wednesday for further clues on the Fed’s stand on its monetary policy.
Markets unanimously expect the Fed to lower its borrowing costs at its next policy meeting on Sept. 18. Traders are evenly divided between a 25- and 50-basis-point rate cut.
At the end of trading day, gold miner SSR Mining topped the index with a 7% gain.
“The trend of moderation in prices continues, (but we) must confirm that (on Wednesday, with the CPI). It should allow the Fed to focus on the employment side of its mandate,” said Angelo Kourkafas, investment strategist at Edward Jones Investments.
U.S. indexes closed up on Tuesday and hit a near two-week high after softer producer prices data reinforced bets of an interest-rate cut by the Federal Reserve in September.
Investors now await all-important consumer-price figures for July on Wednesday and retail sales data on Thursday to firm bets on an aggressive rate cut by the U.S. central bank.
“The core PPI number furthers the narrative that the Fed has done an excellent job of keeping inflation relatively under control and that the more likely move is going to be a rate cut sooner rather than later,” said Michael James, managing director of equity trading at Wedbush Securities.
“You have the CPI print tomorrow morning. Any data point is going to have an outsized influence on the market because people are so jittery right now.”
Traders now see a 55% chance of a 50-basis-point rate cut by the U.S. central bank, from less than 50% before the report, according to CME’s FedWatch Tool.
Stocks wobbled on Monday with the S&P 500 nearly flat and the Nasdaq eking out modest gains, following a turbulent week marked by mixed economic reports and a rate hike by Japan’s central bank.
The S&P 500 gained 90.04 points, or 1.68%, to end at 5,434.43 points, while the Nasdaq Composite gained 407.00 points, or 2.43%, to 17,187.61. The Dow Jones Industrial Average rose 408.63 points, or 1.04%, to 39,765.64.
Information technology and consumer discretionary were the top sector performers.
Energy shares dipped on lower oil prices as OPEC’s move to cut its forecast for demand growth in 2024 tempered fears of supply risks posed by widening conflict in the Middle East.
The Russell 2000 Index, focused on small companies, rose 1.6%.
Starbucks was the top performer on the S&P 500, jumping 24.5%, its biggest one-day percentage gain ever, after the coffee seller appointed Chipotle Mexican Grill’s head Brian Niccol as chairman and CEO. Chipotle shares fell 7.5%.
Home Depot reversed losses and climbed 1.2%. The home-improvement chain forecast a decline in annual profit and a bigger drop in its annual comparable sales.
BuzzFeed jumped 25.9% after the digital media company narrowed its net loss in the second quarter to $6.6 million from $22.5 million a year earlier.
Advancing issues outnumbered decliners by a 4.36-to-1 ratio on the NYSE. On the Nasdaq, advancing issues outnumbered decliners by a 2.59-to-1 ratio.
The S&P 500 posted 17 new 52-week highs and three new lows while the Nasdaq Composite recorded 55 new highs and 128 new lows.
Reuters