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On Thursday, Canada's primary stock index experienced an upward movement, driven largely by advancements in the mining sector. This rise followed recent U.S. economic data that reinforced the likelihood of a quarter-basis-point rate reduction in the coming week.
By mid-morning ET, the Toronto Stock Exchange’s S&P/TSX composite index had risen by 163.42 points, or 0.70%, reaching 23,374.59, approaching a record high. The materials sector led this increase with a notable 2.8% gain, bolstered by record-setting gold prices and a surge in copper values.
Prominent contributors to this rise included B2Gold Corp. and OceanaGold Corp., which saw increases of 8.7% and 6.6%, respectively. Equinox Gold Corp. also experienced a 5.5% rise. The positive momentum in these stocks reflects a broader strength in the materials sector, driven by high commodity prices.
In the U.S., economic data included a slight increase in producer prices for August, which was higher than anticipated but consistent with the easing inflation trend. This data supports the expectation of a minor reduction in rates by the Federal Reserve. Market participants currently assign an 87% probability to a 25-basis-point reduction at the September 18 policy meeting, with a smaller chance of a 50-basis-point cut.
According to Michael Sprung, President at Sprung Investment Management, the optimism surrounding the pace of rate reductions may be somewhat exaggerated. The U.S. weekly jobless claims indicated a marginal rise, suggesting a still-stable labor market despite signs of slowing economic activity.
Conversely, some companies in the Canadian index showed weaker performance. Shopify Inc. declined by 2.2%, GFL Environmental fell by 1.7%, and Ballard Power Systems experienced a 1.1% decrease. Among the most traded shares were B2Gold Corp., Altagas Ltd, and Calibre Mining Corp.
In the energy sector, the TSX's major players experienced a 1% increase, while financial stocks rose by 0.2%. Crude oil prices saw modest gains, with West Texas Intermediate futures up by 0.92% and Brent crude by 0.78%. Gold prices also increased by over 1%. These commodities are crucial exports for Canada, contributing to the overall strength of the TSX.
In the U.S., Wall Street showed minimal change. Moderna Inc. faced a significant decline of 17.8% following a disappointing revenue forecast, marking the most substantial drop on the S&P 500. The producer price index (PPI) for final demand rose by 0.2%, slightly above expectations. This inflation data suggests the Federal Reserve will likely proceed cautiously with rate cuts.
