TORONTO – Canada’s main stock index ended Monday with fairly broad-based gains, while US stock markets closed higher after choppy trading ahead of the Federal Reserve’s interest rate decision on Wednesday.
The S&P/TSX Composite index closed up 176.50 points at 19,562.38, with commodity-based stocks notably gaining after showing some recovery from recent downward pressure, said Paul Harris, portfolio manager at Harris Douglas Asset Management.
“There’s been a big pullback in some of those areas, and now they’re recovering a bit,” he said.
The base metals index rose about three percent while First Quantum Minerals Ltd. by four percent and Teck Resources Ltd. increased by 3.7 percent. Gold stocks also traded higher, including a nearly 11 percent gain for Kinross Gold Corp. after it announced an increase in its share buyback program.
Energy stocks also helped push the market higher, as November’s crude oil contract closed up 60 cents at $85.36 a barrel and October’s natural gas contract was up a cent at $7.75 per mmBTU rose.
“I think oil is really making a difference, and that’s really driving stocks higher in the Canadian market,” Harris said.
The commodity gains may be short-lived, Harris said, as rising interest rates and recession concerns put pressure on such cyclical sectors.
The latest indicator of where rates are headed comes on Wednesday when the Federal Reserve is due to release its latest interest rate decision and accompanying commentary. The pending decision comes after higher-than-expected inflation data from the US last week, while Canadian inflation data is due to be released on Tuesday.
Uncertainty about how far the Fed will go and what kind of guidance it will be providing for the coming months resulted in choppy trading with US markets oscillating between losses and gains.
In the end, the markets closed, and the Dow Jones Industrial Average closed up 197.26 points at 31,019.68. The S&P 500 index rose 26.56 points to 3,899.89, while the Nasdaq Composite rose 86.62 points to 11,535.02.
Expectations of an impending US interest rate hike and some softening Canadian unemployment data have weighed on the loonie, although the Canadian dollar traded at 75.26 cents on Monday, only slightly below Friday’s 75.27 cents .
The loonie traded above 78 US cents in August and above 77 US cents early last week, but falling oil prices and particularly the stronger US dollar have pushed it lower, Harris said.
“The Canadian dollar is in a tough spot because US interest rates are rising, that has helped the US dollar. I think it’s US dollar strength rather than Canadian dollar weakness.”
The December gold contract fell $5.30 to $1,678.20 an ounce and the December copper contract fell half a penny to $3.51 a pound.
This report from The Canadian Press was first published on September 19, 2022.
Company in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press