TSX closes at 3-week high as rate cut hopes renew
FILE PHOTO: The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. REUTERS/Chris Helgren/File Photo
(Reuters) -Canada’s main stock index closed at its highest in over three weeks on Monday, boosted by energy stocks and as investors renewed bets on the Federal Reserve cutting interest rates this year.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 312.06 points, or 1.42%, at 22,259.47.
The materials sector jumped 1.6%, with miners like Capstone Copper and New Gold gaining about 6%, tracking higher prices of precious metals. [GOL/]
Energy shares followed with a 1.7% rise as oil prices climbed earlier in the session after Saudi Arabia hiked June crude prices and as narrowing prospects of a Gaza ceasefire deal renewed fears of a widening conflict in the Middle East. [O/R]
“Rate cut bets, the strong corporate earnings, the firming of oil price, a little relief rally in TD Bank after concerns last week, strong commodity pricing… all those things put together… the TSX is playing catch-up,” said Barry Schwartz, a portfolio manager at Baskin Financial Services.
Shares of Canada’s second largest bank, TD Bank, fell nearly 8% last week after the lender said it had set aside $450 million for potential fines in relation to the U.S. Justice Department’s probe over an anti-money laundering probe. They closed up 0.4% on Monday.
“I’d like to see a serious action plan laid out by management on how they’re going to regain the mojo for investors going forward,” Schwartz said on TD Bank.
Meanwhile, U.S. stock indexes ended higher, their third straight session of advances.
Data showing U.S. job growth slowed more than expected in April and annual wage gains cooled had added to bets of a September rate cut by the Federal Reserve, pushing Wall Street indexes to close over 1% higher on Friday.
Richmond Fed President Thomas Barkin said the current interest rate level should cool the economy enough to return inflation to the central bank’s 2% target, with the strength of the job market giving officials time to wait.
In corporate news, crypto miners Bitfarms and Hit 8 rose 5.2% and 6.5%, respectively, tracking gains in Bitcoin.
(Reporting by Nivedita Balu in Toronto and Purvi Agarwal in Bengaluru; Editing by Ravi Prakash Kumar and Jonathan Oatis)