TORONTO — Canada's main stock index rose by more than 200 points on Tuesday as gains in base metal and financial stocks helped lead a broad-based rally, while U.S. stock markets also climbed.
The S&P/TSX composite index was up 216.92 points at 20,839.63.
Lesley Marks, chief investment officer of equities at Mackenzie Investments, called it another strong showing led by renewed hope that interest rate cuts could be in store after the calendar flips.
“I think what we've seen generally from our central bank and the (U.S.) Federal Reserve is confirmation that interest rates have peaked and the next step is going to be lower interest rates at some point in 2024,” she said.
“The equity market loves this because as the saying goes, ‘Don't fight the Fed.’ This has been and will continue to be certainly a nice tailwind for equity investors.”
In New York, the Dow Jones industrial average was up 251.90 points at 37,557.92. The S&P 500 index was up 27.81 points at 4,768.37, while the Nasdaq composite was up 98.03 points at 15,003.22.
The November consumer price index report released Tuesday by Statistics Canada showed the annual rate remained flat from the previous month at 3.1 per cent.
Although economists had been forecasting a downtick last month, most don’t expect the lack of progress to change the Bank of Canada's interest rate plans.
Marks said the figure “could be seen as discouraging” but agreed the data point would have little sway on its own.
“We're going to see a lot more economic data between now and the next Bank of Canada meeting and we'd expect to see continued indications of what we have seen for the last six months or so, which is softness in the Canadian economy,” she said.
“That should support the Bank of Canada's decision to think about the timing of their first interest rate cut in the cycle.”
Meanwhile, Marks said markets also saw a boost Tuesday thanks to the latest U.S. residential housing starts data for November. The report showed a 14.8 per cent increase from October, which was stronger than expected.
“That is certainly an indication of the kind of strength that we expect to see from interest rate-sensitive sectors when we recalibrate our expectations for lower interest rates into the future,” said Marks.
"That's very good for certain commodities — lumber, specifically — and in Canada, that appears to be one of the strongest subsectors driving Canadian stocks today.”
The Canadian dollar traded for 74.94 cents US compared with 74.70 cents US on Monday.
The February crude contract was up US$1.12 at US$73.94 per barrel.
Marks said geopolitical events such as tensions in the Middle East haven’t affected the price of oil to the degree expected, as supply and demand considerations have outweighed other factors.
She said an oversupply for oil has created a significant headwind, resulting in prices coming down since September when they soared above US$90 a barrel.
But in recent days, the price has ticked up in part due to optimism around the economy “because lower interest rates should be more stimulative globally,” said Marks.
The January natural gas contract was down a penny at US$2.49 per mmBTU.
The February gold contract was up US$11.60 at US$2,052.10 an ounce and the March copper contract was up almost five cents at US$3.90 a pound.
This report by The Canadian Press was first published Dec. 19, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Sammy Hudes, The Canadian Press
