The TSX is up 85 points on higher commodity prices and after the release of key Canada GDP and US PCE data. Energy (+2.2%) and miners (+1.3%), the biggest gainers
Oil prices rose as a key US inflation measure fell more than expected last month.
Gold prices rose as the same data pushed the dollar down on hopes US interest rates will soon be lowered.
But natural gas traded lower ahead of fresh storage data as mild forecasts see demand remaining light.
On the domestic front, CIBC Economics noted Canadian growth in the final quarter of last year, combined with early tracking for Q1, is “running somewhat stronger” than the Bank of Canada had assumed in its January MPR. However, CIBC said, activity has been driven largely by an easing of previous supply constraints helping exports and car sales, rather than necessarily an improvement in domestic demand. Moreover, it added, GDP is still falling on a per-capita basis. Because of that, and given that inflation is actually running below the BoC’s January MPR projections, today’s data doesn’t change CIBC’s forecast for a first interest rate cut in June.
Meanwhile, BMO Economics, in looking at U.S. Personal Income & Consumption (January) data, said the bottom line is that the “hot” PCE inflation and personal income growth in January will keep the FOMC “firmly on inflation watch”. But it added the drop in the year-on-year PCE measures of inflation will give the Fed “some additional breathing room to remain data dependent and patient” as they consider the timing of their first interest rate cut.
