TORONTO — Gains in the energy, financial and base metal sectors helped Canada’s main stock index post a small gain Tuesday as the loonie crested 75 cents US, while U.S. markets also rose modestly the day before a highly anticipated interest rate announcement from the Federal Reserve.
The S&P/TSX composite index closed up 69.09 points at 19,990.40.
In New York, the Dow Jones industrial average was up 145.79 points at 34,212.12. The S&P 500 index was up 30.08 points at 4,369.01, while the Nasdaq composite was up 111.40 points at 13,573.32.
“Investors are waiting for the Fed decision that comes out tomorrow,” said Anish Chopra, managing director with Portfolio Management Corp.
“Based on the … modest market moves upward, they’re leaning slightly positive that the Federal Reserve will take a pause and won’t raise rates.”
The Federal Reserve is set to make its next interest rate announcement Wednesday. Meanwhile, the latest inflation data for the U.S. came out Tuesday, a key driver for the central bank’s decision.
Consumer prices cooled in May, rising just 0.1 per cent month over month despite underlying price pressures remaining high. The annual rate of inflation was four per cent, the lowest such figure in more than two years and a significant decrease from 4.9 per cent in April. The decline was driven by lower gas prices and slowing grocery price inflation, amid other factors.
“The conclusion that you can draw is that inflation continues to slow,” said Chopra. That’s positive news as it shows the Fed has been successful in containing inflation, he said.
“The fact that … U.S. consumer prices had the smallest annual increase in over two years makes it likely that the Fed will pause tomorrow,” he said.
However, he expects the messaging from the U.S. central bank will be similar to that of the Bank of Canada’s recent messaging: that it will continue to be data dependent as it seeks to further quell inflation.
“The Federal Reserve is really … trying to get their inflation number down to two per cent,” said Chopra.
“There’s always some chance or probability that the Fed would still raise rates because inflation is still not at the target that they’ve set.”
The Bank of Canada raised its overnight rate last week after several straight months of holding it steady. Meanwhile, the Fed has yet to pause its hiking campaign.
The loonie closed above 75 cents US for the first time since mid-February. The Canadian dollar traded for 75.13 cents US compared with 74.82 cents US on Monday.
Oil prices regained most of their losses Tuesday after sinking below US$70 a barrel Monday.
The July crude contract was up US$2.30 at US$69.42 per barreland the July natural gas contract was up seven cents at US$2.34 per mmBTU.
The August gold contract was down US$11.10 at US$1,958.60 an ounce and the July copper contract was up eight cents at US$3.83 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published June 13, 2023.
Companies in this story: (TSX:GSPTSE, TSX_CADUSD=X)
