Toronto stocks rose on Wednesday, led by gains in materials and technology shares, while investors assessed Canadian retail sales data for more clues on the Bank of Canada’s interest rate path. U.S. markets also rallied, finding relief in a drop in bond yields after several days of them climbing to multi-year peaks.
The yield on the 10-year U.S. Treasury note eased from near 16-year highs after weak business activity data from the United States and the euro zone. Canadian bond yields also declined, with the five-year yield falling about 12 basis points to 4.06%.
“What’s troubled this market has been the persistent rise in rates at the longer end,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
U.S. Federal Reserve Chair Jerome Powell’s comments on Friday at the Jackson Hole conference will be scrutinized for clues on the U.S. central bank’s interest rate path.
The Toronto Stock Exchange’s S&P/TSX composite index rose nearly 1%.
Heavily-weighted materials sector, which houses miners and fertilizer companies, rose 1.7%, supported by higher gold prices.
Rate-sensitive technology stocks added about 2.7%. Tech stocks are the best performer of the benchmark index, having risen over 30% year-to-date.
Canadian June retail sales data showed 0.1% growth from the previous month, driven mainly by car sales, a sign of weak consumer spending that could convince the central bank that interest rate hikes are sinking in.
As of Wednesday afternoon, bond market participants were betting on an 81% chance for the BoC to keep interest rates unchanged at its September meeting after the data, compared with 73.07% before the data.
Investors will be looking out for the quarterly earnings of Canada’s big banks due later this week. Royal Bank of Canada and Toronto-Dominion Bank will kick off the earning season on Thursday.
According to preliminary data, the S&P 500 gained 48.84 points, or 1.11%, to end at 4,436.39 points, while the Nasdaq Composite gained 215.16 points, or 1.59%, to 13,721.03. The Dow Jones Industrial Average rose 188.50 points, or 0.55%, to 34,477.33.
Investors were awaiting results in the post market from chip making giant Nvidia. Nvidia is part of the so-called Magnificent Seven group of megacap stocks including Apple and Tesla that have powered the S&P 500′s sharp gains this year, and investors fear a selloff if the company fails to meet expectations.
According to strategists in a Reuters poll released Wednesday, the S&P 500 will eke out only marginal gains between now and year end, after its strong move up already this year. The index was forecast to end the year at 4,496.
In U.S. stock moves, shares of drugmakers Gilead Sciences and Merck & Co advanced after Swiss rival Roche inadvertently published positive lung cancer drug trial data.
Reuters, Globe staff