Canada’s main stock index recouped earlier losses to end higher on Monday, as optimism about equities offset Chinese data that revived fears about a global economic slowdown.
The Toronto Stock Exchange’s S&P/TSX composite index ended 0.79 points higher at 20,180.60, its highest closing level since June 10.
U.S. stocks added to gains from last week when signs that inflation might have peaked in July increased investor confidence that a bull market could be under way.
“Overall, the market is telling me that unless something new comes up that we haven’t factored in yet, it is poised to move higher in the second-half of the year,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.
The Toronto market index has climbed about 11% from its July trough but is more than 9% below its record high in April.
The heavily weighted financial sector rose 0.4%, helped by a gain of 9.9% for Home Capital Group Inc after the mortgage lender rejected a takeover bid from a buyer it did not name.
Technology added 0.6%, while industrials ended 0.5% higher.
Meanwhile, U.S. crude oil futures CLc1 settled 2.9% lower at $89.41 a barrel on renewed concerns about reduced fuel demand after data showed China’s economy unexpectedly slowed in July. That weighed on the energy sector, which closed down 1.6%.
The materials group, which includes precious and base metals miners and fertilizer companies, was also a drag, losing 1.2% as gold and copper prices fell.
Shares of Turquoise Hill Resources Ltd lost 10.4% after the company rejected an offer by majority shareholder Rio Tinto Ltd to buy the 49% stake it does not already own.
U.S. stocks rose on Monday with megacap growth shares, extending the market’s recent rally amid investor optimism the Federal Reserve can achieve a soft landing for the economy.
Shares of Apple Inc climbed 0.6%, while Microsoft Corp rose 0.5% and Tesla Inc jumped 3.1%.
Those stocks gave the S&P 500 and Nasdaq their biggest boosts as U.S. Treasury yields eased. China’s central bank cut key lending rates in a surprise move to revive demand after the economy unexpectedly slowed in July.
Consumer staples and utilities sectors also had strong gains.
The S&P 500 has rebounded sharply since mid-June, helped last week by signs that inflation may have peaked in July. The benchmark remains down about 10% since Dec. 31.
“Market participants (are) looking at the Fed and saying, ‘Hey, they’re going to be cutting rates here sooner than we know, and that’s going to be good for the equity market,’” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.
The Dow Jones Industrial Average rose 151.39 points, or 0.45%, to 33,912.44, the S&P 500 gained 16.99 points, or 0.40%, to 4,297.14 and the Nasdaq Composite added 80.87 points, or 0.62%, to 13,128.05.
The Fed since March has delivered a stiff set of interest rate increases in an effort to battle inflation. Some investors have worried that an aggressive pace of rate hikes by the U.S. central bank could push the economy into recession.
Higher interest rates can depress stock multiples, especially of technology and other growth stocks.
The S&P 500 value index underperformed the S&P 500 growth index on the day. The S&P 500 energy index was down 2%.
Quarterly reports from big retailers are expected this week and will round out the second-quarter reporting period. Results from Walmart Inc and Home Depot Inc are due before the bell on Tuesday. Walmart was up 0.3% while Home Depot was nearly flat.
Target Corp is also due to report quarterly results this week.
Estimated earnings growth on the second quarter for S&P 500 companies has improved since July 1, and news from U.S. companies has mostly surprised investors, who had been bracing for a gloomier outlook on both businesses and the economy.
U.S.-listed shares of China’s e-commerce giant Alibaba Group Holding Ltd slipped 0.6%.
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