Canada’s main stock index rose on Tuesday to its highest closing level in two weeks, helped by gains for the technology sector and an increase for Teck Resources shares as investors awaited a Bank of Canada interest rate decision.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 123.98 points, or 0.6%, at 20,055.60, its highest closing level since May 23.
“The TSX Composite is getting a boost (Tuesday), led by the technology sector,” said Brandon Michael, senior investment analyst at ABC Funds.
Technology gained 2.1%, led by an increase of nearly 6% for e-commerce company Shopify Inc
Heavily weighted financials were up 0.9%, while energy gained 1% even as the price of oil settled 0.6% lower at $71.74 a barrel.
Teck Resources Ltd said it has received several indications of interest for its steelmaking coal business after withdrawing a plan to separate its copper and coal business. Its shares ended nearly 3% higher.
The Bank of Canada became the first major global central bank to pause its rate-hike campaign in January, but the economy’s surprisingly strong performance since then will test Governor Tiff Macklem’s resolve to stay on the sidelines at a policy decision on Wednesday.
“Against a backdrop of surprisingly strong economic data and a buoyant housing market, (Wednesday’s) meeting could go either way,” Michael said. “In any case, we believe we are in the final innings of this tightening cycle, with all indications pointing to a soft landing for the economy.”
The Ivey Purchasing Managers Index fell in May to a three-month low but still showed that economic activity is expanding.
U.S. stocks closed up on Tuesday, helped by some advances in economically sensitive sectors, as investors awaited inflation data and the Federal Reserve’s policy meet next week.
Inflation data is expected to show consumer prices cooled slightly on a month-over-month basis in May but core prices are likely to have remained elevated, and the Fed is widely expected to hold interest rates.
The S&P 500 is up almost 20% from its October 2022 lows, boosted by gains in megacap stocks, a stronger-than-expected earnings season and hopes that the U.S. central bank is nearing the end of its interest rate-hike cycle.
The Dow Jones Industrial Average rose 10.42 points, or 0.03%, to 33,573.28, the S&P 500 gained 9.94 points, or 0.23%, to 4,283.73 and the Nasdaq Composite added 46.99 points, or 0.36%, to 13,276.42.
“It looks like investors are gaining a little optimism,” said Cresset Capital CIO Jack Ablin.
“The narrowness in the market where everyone was focused on the top seven names or so is starting to dissipate a little bit and that’s good news.”
Financials led gains among the 11 major S&P 500 sectors, while the KBW regional banking index was firmly in the green. The Russell 2000 index of small-cap companies also showed strength.
Recent economic data and dovish remarks from Fed officials have raised the odds of the Fed holding interest rates at its June 13-14 meeting.
Fed fund futures indicate traders have priced in a near 80% chance that the central bank will hold interest rates in the 5%-5.25% range, according to CMEGroup’s Fedwatch tool. However, they see 50% odds of another 25-basis-point rate hike in July.
Coinbase Global plunged after the U.S. Securities and Exchange Commission sued the crypto exchange, accusing it of illegally operating without having first registered with the regulator.
Advanced Micro Devices rose after Piper Sandler raised the price target on the stock to $150, the second highest on Wall Street, as per Refinitiv data.
Reuters