The Toronto stock market was essentially unchanged as the latest data showed that the country’s inflation rate has risen above the Bank of Canada’s target.
The S&P/TSX composite index inched up 7.75 points at 15,104.47.
The Canadian dollar rose sharply, up 0.55 of a cent to 92.95 cents (U.S.) as Statistics Canada reported annual inflation rose to 2.3 per cent in May, up from two per cent in April. It’s the first time the rate has surpassed the Bank of Canada’s two-per cent target in more than two years.
Economists had expected the rate to come in slightly above April’s reading of two per cent. The underlying core inflation reading was 1.7 per cent.
Markets will be watching how Bank governor Stephen Poloz will respond. He had previously dismissed the high inflation readings as temporary, and instead advocated that Canada was still at risk of suffering from low inflation. His stance had indicated that the central bank would’ve been more likely to keep interest rates low for longer, but that view might change due to these new figures.
In the U.S., the Dow Jones industrials rose 8.63 points to 16,930.09, the Nasdaq jumped 5.91 points to 4,365.24, while the S&P 500 added 0.62 of a point to 1,960.10, amid continued geopolitical concerns in Iraq as government forces continue to defend the takeover of the Beiji oil refinery by extremists.