TORONTO — Canada's main stock index gained almost 250 points Monday amid a broad rally led by financial, industrial and technology stocks, while U.S. markets also climbed higher, snapping out of last week's losing streak.
“The U.S. market is staging a pretty nice rebound after what was the worst week of the year,” said Mona Mahajan, senior investment strategist at Edward Jones.
The S&P/TSX composite index closed up 245.72 points at 23,027.15.
In New York, the Dow Jones industrial average was up 484.18 points at 40,829.59. The S&P 500 index was up 62.63 points at 5,471.05, while the Nasdaq composite was up 193.77 points at 16,884.60.
Last Friday’s U.S. jobs report added to negative sentiment as the numbers showed continued cooling, Mahajan said.
But this week investors seem to be stepping back and looking at the bigger picture, she said.
“Markets digested the data last week and came in today ... there was a bit of a better outlook,” she said.
The U.S. Federal Reserve is widely expected to start cutting interest rates for the first time since it started hiking them in 2022 to fight inflation, noted Mahajan, while the Bank of Canada looks set to keep cutting in the months ahead.
Some market watchers are calling for a cut of 50 basis points, or half a percentage point, from the Fed over concerns the central bank has waited too long to move.
“Our base case remains for (a quarter-point cut), but they may signal more down the road as needed,” said Mahajan.
Monday’s gains saw all three major indexes in the U.S. gain about 1.2 per cent.
Mahajan said signs continue to point toward a broadening in market leadership.
“Tech, of course, had been the market leader for much of the first half of the year,” she said.
“But ... as the Fed or Bank of Canada are cutting rates, you could get some valuation expansion.”
This week will bring the last report on U.S. inflation before the Fed’s decision, with Canada’s own inflation report coming next week.
Mahajan said inflation is still a "critical" report and closely watched by the Fed, but inflation has been travelling in a "benign and positive" direction.
She said the report will likely see inflation continue to move lower, helping solidify a rate cut from the Fed.
The Bank of Canada has already cut rates three times as Canada's economy weakened more quickly under the weight of interest rate hikes.
The Canadian dollar traded for 73.74 cents US compared with 73.83 cents US on Friday.
The October crude oil contract was up US$1.04 at US$68.71 per barrel and the October natural gas contract was down 11 cents at US$2.17 per mmBTU.
The December gold contract was up US$8.10 at US$2,532.70 an ounce and the December copper contract was up seven cents at US$4.14 a pound.
This report by The Canadian Press was first published Sept. 9, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
