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Canada's main stock index saw gains on Monday, driven by strength in the energy sector as oil prices climbed. Meanwhile, U.S. markets presented a mixed picture.
Canadian markets outperformed their U.S. counterparts on Monday, largely due to robust performance in the resource sector. Zechner highlighted two major deals announced on Monday—Tourmaline Oil's acquisition and the sale of Osisko Mining—as key factors boosting the sector. The S&P/TSX Composite Index closed up by 87.63 points, reaching 22,398.93.
The energy index on the TSX surged by over three percent, with oil prices climbing above $80 per barrel.
In contrast, U.S. markets were mixed. The Nasdaq slightly outperformed other major indexes, while the Dow Jones Industrial Average declined, and the S&P 500 remained flat. The Dow Jones was down by 140.53 points, closing at 39,357.01. The S&P 500 rose by 0.23 points to 5,344.39, and the Nasdaq Composite increased by 35.31 points, ending at 16,780.61.
Tech stocks, which suffered losses last week, led the recovery, Zechner observed. As earnings season concludes, attention will shift to the U.S. Federal Reserve's September meeting. The upcoming Jackson Hole Economic Symposium will also be closely watched for commentary from Fed Chair Jerome Powell on potential rate adjustments.
There is growing speculation about whether Powell might indicate a larger rate cut than previously anticipated, with markets recently adjusting expectations towards a possible 50-basis-point cut rather than the standard 25.
This week will also feature important economic data on retail sales and inflation in the U.S., along with earnings reports from major retailers. Weak economic indicators could increase the likelihood of a larger rate cut in September, Zechner suggested.
Concerns about the U.S. economy potentially overshooting its soft landing have led to more negative market reactions to weaker data, rather than the usual optimism tied to potential rate cuts.
The Canadian dollar was trading at 72.79 cents U.S., slightly down from 72.82 cents U.S. on Friday. The September crude oil contract rose by $3.22 to $80.06 per barrel, while the September natural gas contract increased by five cents to $2.19 per mmBTU. The December gold contract climbed by $30.60 to $2,504.00 per ounce, and the September copper contract was up by eight cents to $4.07 per pound.
