Strong performances in the energy, technology and base metals sectors pushed Canada's main stock index slightly higher on Monday, while the U.S. stock market It also rose.
The S&P/TSX composite index closed up 62.76 points at 22,069.76.
In New York, the Dow Jones Industrial Average rose 69.05 points to 38,868.04, the S&P 500 rose 13.80 points to 5,360.79 and the Nasdaq Composite added 59.40 points to 17,192.53.
Angelo Kourkafas, senior investment strategist at Edward Jones, said the Toronto Stock Exchange benefited from higher oil prices on Monday as they recovered from a recent pullback on demand concerns.
“Demand appears to be holding steady as we head into summer. We are not seeing any major downturn in economic activity,” he said.
Kurkafas said the Bank of Canada's rate cut last week was a positive sign for investors, suggesting a soft landing was becoming more likely.
It has been a quiet week for U.S. markets as the latest inflation data and the Federal Reserve’s interest rate decision are both due on Wednesday.
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The combination of the two “could lead to some volatility or adjustments in interest rate expectations,” Kurkafas said.
He said the Fed is expected to keep interest rates steady, but investors will focus on the Fed's “dot plot,” or its forecast for where interest rates will go for the rest of the year.
When the Fed last released its key rate forecasts, it looked like three rate cuts were likely in 2024. But a string of stronger-than-expected economic reports since then has cast uncertainty about when the central bank will start cutting rates, meaning the Fed's forecasts could be lower this time around, Kurkafas said.
“The inflation picture is proving to be more severe, but the April data is encouraging,” he said.
Kurkafas said that while central banks in Canada and Europe both began cutting interest rates last week, the Fed is in no rush to follow them as it first looks for more encouraging patterns in economic data.
He added that last week's stronger-than-expected U.S. jobs report dampened bets on rate cuts starting in September, while this week's CPI report could change expectations again.
Shares of semiconductor giant Nvidia rose 0.75% on Monday, the first trading day after the company's 1-for-10 stock split.
Kurkafas said the company has been at the “epicenter of enthusiasm for artificial intelligence.”
The Canadian dollar traded for 72.65 cents US compared with 72.78 cents US on Friday.
The July crude contract rose $2.21 to $77.74 a barrel, while the July natural gas contract fell 1 cent to $2.91 per 1,000 cubic feet.
The August gold contract rose $2 to $2,327 an ounce, and the July copper contract rose 6 cents to $4.54 a pound.
© 2024 The Canadian Press
