TORONTO —
Canada’s main stock index hit 19,000 points for the first time Wednesday on a supportive outlook by the U.S. Federal Reserve.
The S&P/TSX composite index erased morning losses to close up 109.09 points to 18,983.10 after hitting an intraday record of 19,037.13.
In New York, the Dow Jones industrial average was up 189.42 points at 33,015.37 to surpass 33,000 for the first time. The S&P 500 index gained 11.41 points to a record close of 3,974.12, while the Nasdaq composite increased 53.63 points at 13,525.20.
Sentiment was buoyed by the U.S. central bank’s bullish outlook for economic growth and reduced unemployment that should keep its benchmark interest rate near zero through 2023 despite increased inflation.
The Fed significantly upgraded its forecasts for growth and inflation. It now envisions the economy expanding 6.5 per cent this year, up sharply from its previous projection in December of 4.2 per cent.
The increase is being propelled by a rise in COVID-19 vaccinations, supported by a US$1.9-trillion fiscal relief package.
Unemployment is expected to fall from the current 6.2 per cent to 4.5 per cent by year’s end and to 3.9 per cent, near a healthy level, at the end of 2022.
It raised its forecast for inflation by the end of this year to 2.4 per cent from 1.8 per cent. That level of inflation would finally surpass the Fed’s two per cent annual target after years of chronically low inflation. But the Fed foresees inflation falling back to two per cent in 2022.
The central bank also said it would continue to buy US$120 billion in bonds each month to keep longer-term borrowing costs down.
Markets responded positively to the pledge of ongoing support and upbeat assessment of the global economy, said Candice Bangsund, portfolio manager for Fiera Capital.
“This essentially has alleviated fears of a hawkish turn from the Fed which would risk derailing the economic recovery and the record-breaking equity market rally,” she said in an interview.
“So when you think about it, taken together, it’s a very lucrative environment for stocks and risk assets in general.”
The Fed’s outlook and projections are consistent with what officials have telegraphed about remaining supportive until the recovery is well underway.
When asked about timing of the next move, chairman Jerome Powell insisted it wasn’t time to discuss an exit strategy.
The Fed reinforced the rotation toward economically sensitive sectors such as energy, financials, materials and industrials over technology and telecommunications.
That benefits the TSX because of its exposure to these sectors, which resulted in it outperforming U.S. stock markets, said Bangsund.
“Very much a compelling proposition for equity investors,” she said, noting that her year-end target for the TSX has been revised upwards to 20,000.
Bond yields increased to a 13-month high of 1.689 per cent before shaving some of the gains to reach 1.65 per cent.
A steepened yield curve hurts the technology sector.
Commodity sectors rose with energy up 1.4 per cent despite a dip in crude oil prices.
Enerplus Corp. led with shares gaining 7.8 per cent followed by Vermilion Energy Inc. at 5.6 per cent.
The May crude oil contract was down 88 cents at US$63.98 per barrel and the April natural gas contract was down four cents at US$2.52 per mmBTU.
Crude prices fell on a surprising 2.4-million-barrel increase in U.S. stockpiles last week to the highest level since December.
In addition, the International Energy Agency gave a downbeat assessment of crude markets in its monthly report. It said oil markets are not on the verge of a new price supercycle with supplies remaining plentiful.
The Canadian dollar traded for 80.22 cents US compared with 80.29 cents US on Tuesday.
Materials also climbed 1.4 per cent despite lower gold prices with Torex Gold Resources Inc. up seven per cent, B2Gold Corp. up 5.1 per cent and Oceanagold Corp. 4.6 per cent higher.
The April gold contract was down US$2.10 at US$1,728.80 an ounce and the May copper contract was up four cents at US$4.11 a pound.
Technology was one of five sectors that fell on the day with shares of Lightspeed POS Inc. down three per cent but Shopify Inc. up 2.4 per cent.
Telecommunications slipped for the first time in three days as Rogers Communications Inc. lost five per cent, the first drop since announcing its blockbuster $26-billion deal to buy Shaw Communications Inc.
This report by The Canadian Press was first published March 17, 2021.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
