Canada’s main stock index, the S&P/TSX composite index, closed Tuesday with a significant gain of 139.76 points, reaching 22,011.72. The surge was primarily driven by a strong performance in technology stocks, mirroring a positive trend in U.S. markets. The Nasdaq, a technology-heavy index, rose by 1.6 percent. Brianne Gardner, a senior wealth manager at Raymond James Ltd., attributed the gains to anticipation of upcoming earnings reports from tech giants such as Meta, Microsoft, and Alphabet. These reports are expected to provide insights into the performance of the technology sector.
The positive sentiment extended to U.S. stock markets, with the Dow Jones industrial average climbing by 263.71 points to 38,503.69. The S&P 500 index also experienced a notable increase of 59.95 points, reaching 5,070.55, while the Nasdaq composite surged by 245.33 points to close at 15,696.64.
The market’s positive mood was further influenced by a weaker-than-anticipated report on U.S. business activity. This report raised expectations that the U.S. Federal Reserve may consider cutting interest rates in the future. According to Gardner, the market remains highly data-dependent, eagerly awaiting the release of the U.S. personal consumption expenditures (PCE) report later this week. The PCE report is a key indicator of inflation trends and will provide crucial information for the Fed as it weighs its decision on interest rate adjustments.
Despite recent stronger-than-expected inflation data, Gardner noted that the upcoming PCE report will be closely watched to determine whether the trend continues or shifts. Expectations for the timing of Fed interest rate cuts have been revised since the beginning of the year, with the central bank now anticipated to initiate cuts in September and potentially only once or twice in 2024.
Gardner pointed out that the U.S. economy has shown resilience amidst various challenges, contributing to the positive market sentiment. The TSX has weathered recent market corrections better than U.S. indexes due to its strength in the energy sector and reduced exposure to technology. In currency markets, the Canadian dollar traded at 73.14 cents US, compared to 72.91 cents US on Monday.
In the commodities market, the June crude oil contract witnessed a rise of US$1.46 to US$83.36 per barrel, while the May natural gas contract saw a modest increase of two cents to US$1.81 per mmBTU. The June gold contract experienced a decline of US$4.30, reaching US$2,342.10 an ounce, and the May copper contract dropped five cents to US$4.43 a pound.
