Canada’s main stock index ended higher on Wednesday as a drop in long-term borrowing costs, following the release of U.S. inflation data, and an acquisition by National Bank of Canada bolstered investor sentiment.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 74.21 points, or 0.3%, at 21,961.55, extending the seesaw pattern of recent days.
“Getting some M&A in there, having lower yields, it just feels like it’s a little bit more risk-on here,” said Greg Taylor, portfolio manager at Purpose Investments. “Banks are up, commodities are doing better with a lower U.S. dollar.”
The U.S. currency and bond yields fell after U.S. consumer prices rose less-than-expected in May, raising hopes for a rate cut from the Federal Reserve in the coming months, with the central bank keeping interest rates at current levels in its latest policy statement.
The Bank of Canada has already begun cutting interest rates.
Canadian utility and real estate stocks are likely to be among the biggest beneficiaries of the BoC’s easing cycle, while the prospect of increased loan demand could help bank shares, investors say.
Financials added 0.5% after National Bank agreed to a C$5 billion ($3.65 billion) deal to buy Alberta’s Canadian Western Bank. Shares of National Bank were down 5.9%, while Canadian Western Bank jumped 68.3%.
Real estate was up 1% and technology ended 1.4% higher.
The price of oil settled 0.8% higher at $78.50 a barrel. Still, energy lost 0.7%.
Consumer discretionary also ended lower, falling 0.5%, with Dollarama shares down 4.1% as the discount store posted lower first-quarter comparable store sales.
The S&P 500 and Nasdaq posted record closing highs for a third straight day on Wednesday after consumer prices data came in softer than expected but the indexes ended off the day’s highs as the Federal Reserve projected only one interest rate cut this year.
The U.S. central bank, in a statement at the end of its June 11-12 meeting, said it left its policy rate unchanged at 5.25%-5.5%, as expected.
Stocks were choppy following the news, with the S&P 500 and Nasdaq paring gains late and the Dow finishing near flat.
“The Fed is acting like a CEO, sandbagging rate cut expectations down to one or two cuts but likely going to beat them later this year with two or more,” said Gene Goldman, chief investment officer at Cetera Investment Management in Los Angeles.
Stocks rallied as the session opened, after the Labor Department reported that U.S. consumer prices were unexpectedly unchanged in May amid cheaper gasoline.
Oracle shares jumped, lifting the market, after the company forecast double-digit revenue in fiscal 2025 after the bell on Tuesday.
According to preliminary data, the S&P 500 gained 45.62 points, or 0.85%, to end at 5,421.14 points, while the Nasdaq Composite rose 266.44 points, or 1.54%, to 17,609.99. The Dow Jones Industrial Average fell 31.90 points, or 0.08%, to 38,715.52.
After the Consumer Price Index report, traders boosted bets that the Fed will cut rates by September. Traders also added to bets on a second Fed rate cut by December.
Apple’s shares climbed, extending recent gains.
- Reuters
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.