Canada’s main index climbed on Thursday, driven by materials-linked stocks, while investors keenly monitored another day of Federal Reserve Chair Jerome Powell’s congressional testimony.
At 10:56 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 183.52 points, or 0.84%, at 21,776.17
Investors are focused on Powell’s testimony before the Senate Banking Committee, which commenced at 10 a.m. ET, after his comments on Wednesday indicated that interest rate cuts were likely in coming months only if warranted by further evidence of falling inflation.
“If the economy continues to remain strong in the U.S., the Fed would just keep doing what they’re doing, which is nothing,” said Allan Small, senior investment adviser of Allan Small Financial Group with iA Private Wealth.
“There’s no reason to do anything, because the economy is still relatively strong and inflation is still coming down,” he added.
Investors now await the crucial nonfarm payrolls report, due on Friday, which could provide further details on the strength of the labor market in the United States.
The materials sector, which houses Canadian miners, climbed 1.5% as gold hit an all-time high on mounting expectations for lower U.S. interest rates this year, while copper touched its highest in five weeks on better-than-expected Chinese trade data.
The sector is up for a sixth session and on track to log its longest winning streak since early 2023, if gains hold.
Information technology stocks also rose 1.1%, led by a 3.7% rise in Descartes Systems after the software company beat fourth-quarter revenue estimates.
Amid the broader rally, consumer discretionary stocks was a laggard, down 0.1%.
Company-wise, manufacturing firm Linamar advanced 10.5% to the top of the TSX after its fourth-quarter results.
Wall Street’s main indexes gained on Thursday ahead of more commentary from Jerome Powell after the Federal Reserve chair stuck to the script overnight by saying the central bank still expects to cut rates later this year.
Powell said rate reductions will “likely be appropriate” later this year, “if the economy evolves broadly as expected” and once officials gain more confidence in inflation’s steady decline.
The comments kept alive investors’ expectations of an interest rate cut in June, giving a boost to U.S equities, which had faltered in the days leading up to the testimony.
Wall Street’s main indexes closed higher on Wednesday, with rate-sensitive technology and chip stocks in the lead.
Most megacap growth and technology stocks rose in early trading on Thursday.
Chip firms such as Nvidia and Micron Technology gained 1.4% and 2.3% respectively, extending their rally from the previous session.
The Philadelphia semiconductor index hit a fresh record high and was last up 1.8%.
All the 11 major S&P 500 sectors rose, with materials and information technology leading the charge.
“We listened to Powell yesterday and it sounds like there will be at some point this year, a rate cut. We just don’t know when,” said Joe Saluzzi, co-manager of trading at Themis Trading.
Meanwhile, Fed Governor Michelle Bowman said the U.S. economy is not at the point where the central bank should reduce interest rates.
All eyes will be back on Powell who is set to wrap up his two-day testimony on Thursday.
The number of Americans filing new claims for unemployment benefits was unchanged last week as the labor market continued to gradually ease, the Labor Department’s data showed.
The data comes ahead of the crucial nonfarm payrolls report, which could provide further details on the strength of the U.S. labor market on Friday.
“Even if the payrolls are stronger than expected, that’s not going to take the rate cut argument off. Unless you start to see some extreme inflationary numbers, the odds are the cut is coming,” Saluzzi said.
The Dow Jones Industrial Average was up 219.73 points, or 0.57%, at 38,880.78, the S&P 500 was up 32.08 points, or 0.63%, at 5,136.84, and the Nasdaq Composite was up 111.59 points, or 0.70%, at 16,143.14.
Lingerie maker Victoria’s Secret & Co dropped 26.7% on a weak annual forecast.
Eli Lilly slipped 1.0% after rival Novo Nordisk said early trial data for its highly anticipated experimental drug, amycretin, showed that participants had a weight loss of 13.1% after 12 weeks.
Reuters
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2024-03-07 11:06:53Z
CBMinAFodHRwczovL3d3dy50aGVnbG9iZWFuZG1haWwuY29tL2ludmVzdGluZy9tYXJrZXRzL2luc2lkZS10aGUtbWFya2V0L21hcmtldC1uZXdzL2FydGljbGUtcHJlbWFya2V0LW5hc2RhcS1zcC01MDAtZnV0dXJlcy1pbmNoLXVwLWFoZWFkLW9mLW1vcmUtZWNvbm9taWMtZGF0YS_SAQA
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