Canada’s main stock index opened higher on Monday, as strength in energy shares boosted the index on higher crude prices, while investors awaited key economic data through the week to assess the interest rate cut trajectory for this year.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 52.02 points, or 0.23%, at 22,360.95.
U.S. stock indexes opened higher on Monday, nearing record peaks following a recent run of gains, with investors awaiting key inflation figures this week to gauge the likelihood of interest rate cuts in 2024.
The Dow Jones Industrial Average rose 78.4 points, or 0.20%, at the open to 39,591.28. The S&P 500 rose 10.4 points, or 0.20%, at the open to 5,233.08, while the Nasdaq Composite rose 59.4 points, or 0.36%, to 16,400.307 at the opening bell.
The S&P 500 and Nasdaq Composite on Friday registered their third week of gains in a row for the first time since January, while the Dow posted its biggest weekly gain since mid-December.
The indexes were back near all-time highs hit in March, boosted by stronger-than-expected earnings reports and signs of a cooling labor market that fueled bets of one or two rate cuts by the U.S. Federal Reserve this year.
“Not only is earnings coming better than anticipated, but the outlook has been raised,” said Thomas Hayes, chairman at Great Hill Capital LLC.
“Market likes that but also needs to get some level of comfort that inflation is not going back up and potentially going down to give the Fed cover for at least one or maybe two cuts before the end of the year.”
The keenly awaited inflation data on Wednesday is expected to show that core consumer prices rose 0.3% on a month-over-month basis in April, for an annual rise of 3.6%, according to economists forecasts in a Reuters poll.
Investors will also focus on a spate of economic readings this week, including monthly producer prices, retail sales and weekly jobless claims.
While Fed policymakers have reassured markets the next policy move is not a rate rise, the timing of the first cut remains uncertain. Cleveland Fed President Loretta Mester is scheduled to speak later in the day.
Traders are currently pricing in rate cuts of 42 bps from the Fed by the end of 2024, according to LSEG’s rate probabilities app, with odds for a September rate cut of at least 25 bps at 63%.
Major companies reporting this week include Home Depot , Walmart, Cisco and Alibaba.
Of the 459 S&P 500 companies that reported through Friday, 77.3% beat analysts’ profit estimates, according to LSEG data. The long-term average is 66.7%.
Oil prices edged higher on Monday after losing about $1 a barrel in the previous session on signs that U.S. policymakers are likely to keep interest rates higher for longer.
Brent crude futures were up 55 cents at $83.34 a barrel. U.S. West Texas Intermediate crude futures rose 62 cents to $78.88.
Though prices were supported by a few factors last week, including a lack of progress in the latest round of negotiations to halt hostilities in Gaza, economic factors are back in the spotlight.
Commentary from policymakers suggests that a lowering of borrowing costs is expected sooner in the UK and Europe than in the United States.
U.S. inflation data this week will further inform the Federal Reserve on interest rate policy.
Analysts expect the U.S. central bank to keep its policy rate on hold for longer, supporting the dollar and making dollar-denominated oil more expensive for investors holding other currencies.
– Reuters
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