Canada’s main stock index rose to a record high on Tuesday as higher gold prices bolstered the shares of metal mining companies and investors awaited a key U.S. inflation report as well as a Bank of Canada interest rate decision this week.
The S&P/TSX composite index ended up 101.48 points, or 0.5%, at 22,361.78, eclipsing the previous all-time record closing high that was set on Friday.
“You had a nice rally in all things that matter to Canada,” said Matt Skipp, president of SW8 Asset Management. “You’ve had oil prices move considerably higher ... you’ve got precious and base metals rallying on the thought that even if inflation is somewhat higher, (interest) rates are still headed down.”
The materials sector rose 2.1% as gold notched a record high ahead of U.S. inflation data on Wednesday that could offer clues on the timeline for expected Federal Reserve interest rate cuts. The sector includes metal miners and fertilizer companies.
Investors expect the Bank of Canada to leave its benchmark interest rate on hold at a 22-year high of 5% on Wednesday but to then begin an easing campaign in June.
The price of oil settled 1.4% lower at US$85.23 a barrel, crimping gains for energy. The sector ended 0.4% higher.
Still, oil remained within reach of the six-month high it posted on Friday. Some analysts are concerned that higher oil prices could revive inflation pressures.
“If we start to get an uptick in inflation, I think the rally (in stocks) loses steam,” Skipp said. “We are getting close to an inflection point.”
BlackBerry Ltd shares advanced 7.4% after the software firm announced a collaboration with AMD to develop robotic systems.
In contrast, shares of Tilray Brands Inc tumbled 20.3% after the company’s results missed estimates.
On Wall Street, the Nasdaq and S&P 500 posted modest gains, weighed down by financial stocks as investors braced for major U.S. banks to kick off earnings reporting season on Friday.
The tech-heavy Nasdaq Composite Index, boosted by chips, enjoyed a more substantial advance, with the S&P 500 nominally higher.
The blue-chip Dow Jones Industrial Average closed essentially unchanged.
Wednesday’s hotly anticipated Consumer Price Index was at the top of most investors’ minds as they tweak expectations on the timing and extent of the Federal Reserve’s rate-cutting phase, following robust economic data such as last Friday’s blockbuster employment report.
“The markets are nervous about tomorrow’s CPI report and buying protection (amid) a growing perception that it could be an uncomfortably high inflation reading,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. “The market is moving to hedge itself.”
JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc, due to report results on Friday, were the three constituents in the S&P Banking index to end lower.
“The financials kick off first-quarter reporting season and often set the tone,” said Bill Northey, senior investment director at U.S. Bank Wealth Management, Billings, Montana. “We are looking to the cyclical areas as an indicator of the health of corporate America.”
While analysts expect inflation to continue meandering down toward the U.S. central bank’s 2% goal, the National Federation of Independent Business reported on Tuesday that small business optimism touched an 11-year low in March, with inflation as the most pressing concern.
“The continued deterioration of the small business sentiment index is actually really important,” Green added. “It’s the same thing that we’ve seen in the past couple of cycles where the larger companies are well protected while small businesses are under extraordinary pressure.”
The Dow Jones Industrial Average fell 9.13 points, or 0.02%, to 38,883.67. The S&P 500 gained 7.52 points, or 0.14%, at 5,209.91 and the Nasdaq Composite added 52.68 points, or 0.32%, at 16,306.64.
Nine the 11 major sectors in the S&P 500 closed higher, with real estate enjoying the largest percentage gains. Financials were the biggest laggards.
Analysts are expecting aggregate S&P 500 first-quarter earnings growth of 5.0% year-on-year, down from 7.2% at the start of the quarter, according to LSEG.
Cryptocurrency and blockchain-related stocks declined, tracking falling bitcoin prices. Exchange operator Coinbase Global and software company MicroStrategy dipped 5.5% and 4.8%, respectively.
Moderna was a bright spot, jumping 6.2% after the drugmaker’s individualized cancer vaccine developed with Merck showed promise in an early-stage trial.
Alphabet Inc’s shares gained 1.1%, pushing the company closer toward the US$2 trillion market cap threshold.
Advancing issues outnumbered decliners on the NYSE by a 1.44-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored advancers. The S&P 500 posted 13 new 52-week highs and one new low; the Nasdaq Composite recorded 62 new highs and 77 new lows. Volume on U.S. exchanges was 10.31 billion shares, compared with the 10.31 billion average for the full session over the last 20 trading days.
Reuters, Globe staff
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