Canada’s main stock index rose on Monday boosted by a jump in oil prices as investors readied for crucial U.S. inflation data and the Federal Reserve’s monetary policy meeting due later this week.
The Toronto Stock Exchange’s S&P/TSX composite index was up 62.76 points, or 0.3% , at 22,069.76.
Oil prices climbed about 3% to a one-week high buoyed by hopes of rising fuel demand this summer.
The high oil prices boosted Toronto’s energy index up 1.4%.
“Over the last several weeks we have seen a sizable pullback in oil prices... the theory is that pullback was likely overdone, and now we’re seeing oil prices go back to about the average price that has been trading over the past 12 months,” Angelo Kourkafas, senior investment strategist at Edward Jones.
Investors drew a cautious stance ahead of Wednesday’s U.S. consumer prices data and the Fed’s monetary policy meeting, which could drive market action and determine the country’s timing and scope of monetary policy easing this year.
“It is going to be a very big week on the macro front in the U.S., which no doubt will impact the Canadian markets. There’s no expectation for the rate cut by the Fed, but the focus is going to be on the updated summary to economic projections,” Kourkafas said.
While the Bank of Canada (BoC) has already initiated monetary policy easing with a 25 basis points cut last week, investors are betting on a near 51% probability that the Fed will start rate cuts in September.
Meanwhile, Canada’s manufacturing sales data and wholesale trade numbers for the month of April are scheduled for release on Friday.
The materials sector, which includes metals miners and fertilizer companies, followed with a 1.3% climb, supported by higher prices of most metals, including gold and copper.
In corporate news, Bitcoin miner Bitfarms dropped 3.6% after it approved the adoption of a “poison pill” to fend off a potential hostile takeover attempt by rival Riot Platforms.
The S&P 500 and Nasdaq eked out record closing highs on Monday, although investors were cautious ahead of this week’s consumer prices report, a Federal Reserve policy announcement and Apple’s developer conference.
Providing some support to the Nasdaq and S&P 500, Nvidia shares ended up 0.7%, the session after a 10-for-one stock split. Some investors now believe the chip maker might be included in the blue-chip Dow.
The Consumer Price Index report for May is due Wednesday along with the conclusion of the Fed’s two-day policy meeting.
The central bank, which will release updated economic and policy projections, is expected to hold interest rates steady. Investors will look for clues on when the U.S. central bank may begin to cut interest rates.
“This is an important week for the market in terms of comments and messaging from the Federal Reserve,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.
“In addition to that, you’re going see Wednesday morning the CPI report. Anything related to the economy and anything related to inflation is viewed by the market through the lens of the Federal Reserve.”
The Dow Jones Industrial Average rose 69.05 points, or 0.18%, to 38,868.04, the S&P 500 gained 13.8 points, or 0.26%, to 5,360.79 and the Nasdaq Composite added 59.40 points, or 0.35%, to 17,192.53.
Traders dialed back expectations for rate cuts in September after Friday’s stronger-than-expected jobs data for May, with the odds of a reduction at 50%.
“I feel like it’s going to be pretty muted as people try to hedge themselves for what they might see on Wednesday,” said Alex McGrath, private wealth advisor at NorthEnd Private Wealth.
Apple shares dipped 1.9% ahead of the iPhone maker’s annual developer conference. Investors are eager for updates on how it is integrating artificial intelligence into its offerings.
Among the day’s gainers, Southwest Airlines jumped 7% after activist investor Elliott Investment Management disclosed it has built up a $1.9 billion position in the company.
Diamond Offshore Drilling shares climbed 10.9% after oilfield services company Noble said it would buy the smaller rival in a $1.59 billion deal. Noble shares rose 6.1%.
Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 56 new highs and 177 new lows.
Volume on U.S. exchanges was 10.39 billion shares, compared with the 12.80 billion average for the full session over the last 20 trading days.
- Reuters
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