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Canada's main stock index reached a record high on Wednesday, driven by gains in energy shares following the killing of a Hamas leader, which heightened tensions in the Middle East. Market focus then shifted to the U.S. Federal Reserve's rate decision later in the day.
Energy shares rose by 1.8%, reaching a 12-day high as oil prices climbed amid escalating Middle Eastern tensions, which overshadowed concerns about demand from China. The sector was on track for its best performance in over a month.
Materials shares added to the benchmark index with a 1.2% increase, buoyed by rising gold and silver prices. This uptick was driven by expectations of a dovish stance from the U.S. central bank, which was set to announce its rate decision at 2 p.m. ET. Copper prices also rose, supported by a weak dollar and optimism about potential stimulus measures in China.
Richard Flynn, managing director at Charles Schwab UK, noted, "Fireworks are likely to be few and far between in the Fed's report today, as it will not include new inflation projections and is almost unanimously expected to leave rates unchanged."
Money markets predict that the Fed will maintain current interest rates in Wednesday's meeting but have priced in a rate cut for September.
In domestic news, Canada’s gross domestic product increased by 0.2% in May, surpassing market expectations, and the economy likely expanded at a 2.2% annualized rate for the second quarter.
In corporate updates, Precision Drilling Corp saw a 7.8% increase following the release of its second-quarter results, while Oceanagold Corp dropped by 8.4% after its earnings report. Cameco rose by 0.4% after reporting adjusted earnings per share of 14 Canadian cents for the second quarter, compared to a loss of 3 Canadian cents the previous year.
