(Toronto) The Toronto Stock Exchange ended Monday’s session higher, buoyed in particular by strength in the energy and battery metals sectors, while US stock markets were closed for the Memorial Day holiday.
The Toronto Stock Exchange’s S&P/TSX Composite Index climbed 47.64 points to end the day at 19,967.95 points.
Canadian markets typically steer based on movements in U.S. markets, so with no major news for investors to react to, it’s been a quiet day for the TSX, said Lesley Marks, chief equity investment officer at Mackenzie Investments.
However, on Tuesday, U.S. investors will react retroactively to the tentative U.S. debt ceiling agreement reached over the weekend, after weeks of negotiations. President Joe Biden and Speaker of the House of Representatives Kevin McCarthy have agreed to avoid a government default.
“Markets were positive heading into the weekend,” noted M.me Marks, thanks to rumors that a deal had been struck – although she feels that reaching such a deal was to be expected. Legislative hurdles still need to be cleared, but investors will likely be happy to shake off the uncertainty the market talks generated, distracting attention from other important matters.
The big question mark that will continue to weigh on the markets will now be the next decision of the Federal Reserve of the United States on its interest rates. The central bank may decide to suspend rate hikes at the mid-June meeting, Ms.me marks.
Market expectations have bifurcated on this, she said. While Fed Chairman Jerome Powell has signaled that a pause could occur data permitting, some of the most recent economic data releases have left investors uncertain as to which path the bank might take.
Meanwhile, the continued resilience of the economy, particularly that of the labor market, means that market expectations for possible rate cuts in 2023 are diminishing, observed Mr.me marks.
“The likelihood of a decline this year is all but gone,” she noted.
If the U.S. central bank were to choose to raise interest rates again, it would put the Bank of Canada in a difficult position, as it is problematic that its monetary policy deviates significantly from that of its southern neighbor, explained Mme marks. Canada’s central bank already suspended rate hikes earlier this year.
This week will notably see the release of new data on Canada’s gross domestic product (GDP), which should help the central bank prepare for its own June decision. Also, the United States will get the latest job vacancies figures.
In the currency market, the Canadian dollar traded at an average rate of 73.57 cents US, up from 73.41 cents US on Friday.
Crude oil prices rose 37 cents to US$73.04 a barrel and natural gas prices fell 6 cents to US$2.36 per million BTU.
The price of gold fell US$1.90 to US$1961.20 an ounce and that of copper depreciated 1 cent US to US$3.67 a pound.