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The Canadian stock market saw a positive start on Thursday, buoyed by a significant increase in global markets following the U.S. Federal Reserve's decision to reduce interest rates by 50 basis points. The TSX Composite Index rose by 142.95 points, reaching 23,735.55 at the beginning of the trading session. The Canadian dollar saw a slight gain, advancing by 0.07 to 73.55 cents U.S.
Company Updates
Pizza Pizza Royalty declared its monthly cash dividend of $0.0775 per share for September. The company's shares increased by five cents, trading at $13.03.
Performance
The TSX Venture Exchange showed a recovery, gaining 6.62 points, or 1.2%, to reach 582.83. Most of the 12 TSX subgroups experienced gains, with notable increases in information technology (up 1.4%), energy (up 1.3%), and health care (up 1.1%). Utilities and consumer staples were the exceptions, with utilities down 0.6% and consumer staples off 0.1%.
U.S. Stock Market Reaction
In the U.S., stock indices climbed as traders absorbed the Federal Reserve’s decision to cut interest rates by half a percentage point. The Dow Jones Industrial Average rose by 423.7 points, or 1%, to 41,926.80. The S&P 500 increased by 90.01 points, or 1.6%, reaching 5,708.27. The NASDAQ surged by 442.25 points, or 2.5%, to 18,015.91.
The Federal Reserve’s move prompted a shift towards riskier assets. Tech stocks saw significant gains, with Nvidia and AMD rising by around 5% and 4%, respectively, while Micron Technology advanced more than 2%. Major tech companies such as Meta and Alphabet also saw increases, advancing by 2.4% and 1.9%, respectively. Stocks tied to a potential boost in economic activity also experienced gains. JPMorgan Chase increased by 0.8%, Caterpillar rose by 2.6%, and Home Depot saw a 1.5% gain.
The Fed's reduction of the overnight lending rate to a range of 4.75% to 5% from the previous range of 5.25% to 5.5% was a notable event, marking the first rate cut in four years. This decision had a mixed reception from investors, some of whom questioned the scale of the reduction.
Market Movements
Treasury prices fell, causing yields to rise to 3.74% from 3.71% on the previous day. Oil prices increased by 56 cents to $71.42 U.S. per barrel. Gold prices saw a minor increase of 10 cents, reaching $2,598.70.
