Canada Stocks: TSX hits record high as markets bet on potential Fed rate cut

Ballard Power Systems

17/09/2024 15:37

(Updated at 10:10 a.m. ET/ 14:10 GMT)
    By Nikhil Sharma
       Sept 17 (Reuters) - Canada's main stock index hit
another record high on Tuesday, aided by energy stocks, as
investors assessed benign domestic annual inflation data amid
market optimism around an outsized policy cut by the U.S.
Federal Reserve this week. 
    The Toronto Stock Exchange's S&P/TSX composite index
 .GSPTSE  was up 72.93 points, or 0.31%, at 23,775 and was
poised for its fourth consecutive record closing session if
gains hold.
    Markets kept their focus on the U.S. Federal Reserve's
upcoming policy decision on Wednesday, where the policymakers
are expected to offer the first interest rate cut in four years.
    While the extent of the rate cut is still debatable, markets
are leaning more towards a bigger half-point reduction, odds of
which stand at 67%.  0#FEDWATCH 
    "The market will be happy with a fifty basis point cut as
long as there's no indication of prolonged or deeper weakness in
the economic environment than the market expects," said Kevin
Headland, Co-chief investment strategist at Manulife Investment
Management.
        Domestic markets assessed Canada's 
    annual inflation
     rate, which cooled to 2% in August, reaching the Bank of
Canada's target.
  
        At the last policy meeting earlier this month, the BoC
Governor, 
    Tiff Macklem
    , warned against the risk of inflation falling below its
target as economic growth was weak.
  
        Canadian swaps market sees a 43% chance of a
50-basis-point interest rate cut by the Bank of Canada in
October.
  
        Meanwhile, on TSX, the energy sector led the sectoral
gains  .SPTTEN  that rose 0.6%, tracking a rise in oil prices. 
  
        Crude oil and gold are among Canada's top exports. 
        In oil markets, prices indicated by the West Texas
Intermediate crude futures  CLc1  rose 1.14%. Brent crude
 LCOc1  rose 0.76%  O/R . Gold  XAU=  was down 0.2%.
  
        The TSX is up 13.3% for the year.
  



 (Reporting by Nikhil Sharma in Bengaluru; Editing by Leroy Leo
and Tasim Zahid)
 ((Nikhil.Sharma@thomsonreuters.com;))