Canada’s main stock index rose Thursday on rising commodity prices, even as new inflation data south of the border sent U.S. markets tumbling from the previous day’s highs.
The S&P/TSX Composite Index closed up 77.36 points at 24,302.26.
The situation was very different in New York, where the Dow Jones industrial average lost 57.88 points to 42,454.12 points after hitting a record on Wednesday. The S&P 500 index slipped 11.99 points to 5,780.05, having also set a new high the day before, while the NASDAQ Composite Index fell 9.57 points to 18,282.05.
US markets fell following the latest Consumer Price Index report, which showed US inflation was slightly higher than expected in September.
Stock markets have benefited in recent weeks from investor enthusiasm regarding future interest rate cuts from the US Federal Reserve. But Thursday’s report showing that inflation may still be too high for the Fed’s liking raises the possibility that the central bank will move more slowly than some investors want in lowering its benchmark rate.
“We were looking at a potential rate cut of 25 or 50 basis points at the November meeting,” said Anish Chopra, managing director of Portfolio Management.
“But now investors are thinking that given the inflation numbers, it could be a 25 basis point rate cut – or even no rate cut in November “, he added.
But as U.S. markets absorbed the possibility that inflation might not rise as quickly as expected toward the Fed’s 2% target, Canada’s main stock index moved into positive territory on Thursday.
Crude oil and gold both rose during the day, leading to improvements for Canadian mining and energy stocks. The TSX’s heavy weighting in energy, in particular, helped push the index higher even as U.S. markets fell.
Outside of the energy and mining sector, other major stocks in Canada on Thursday included Air Canada, which gained 4.44% to close at $17.39 per share after the announcement that the pilots of the airline have voted in favor of a new contract, a development that allays fears of a damaging strike.
TD Bank lost 5.03% of its share price after announcing that it will pay approximately US$3.09 billion in fines to US regulators. She pleaded guilty to multiple charges related to failures in its anti-money laundering program. TD stock closed at $81.76 on Thursday.
As geopolitical risks from tensions in the Middle East continue to swirl and uncertainty over inflation and Federal Reserve decisions dominate investors’ minds, Mr. Chopra stressed that all eyes will be on the latest set of company results when they start coming in.
“This will really help investors put into perspective what’s happening in the economy, company by company or sector by sector,” Mr. Chopra said.
On the currency market, the Canadian dollar traded at 72.71 US cents on Thursday compared to 73.05 US cents on Wednesday.
On the New York Mercantile Exchange, the price of crude oil increased by US$2.61 to US$75.85 per barrel and that of natural gas gained two US cents to US$2.68 per million BTU.
Gold rose US$13.30 to US$2,639.30 an ounce and copper jumped three cents to US$4.43 a pound.