TSX climbs as GDP data cements hopes of interest rate pause. Even as it prepares to record its worst quarter in more than a year, Canada’s major stock index nudged higher on Friday, the final trading day of the quarter, as softer-than-expected GDP data supported prospects of a rate pause by the Bank of Canada.
The S&P/TSX composite index (.GSPTSE) of the Toronto Stock Exchange was up 51.63 points, or 0.26%, at 19,642.37 at 10:33 a.m. ET (14:33 GMT).
The benchmark index, however, is expected to record its worst month since May and its worst quarter since June 2022. The fall in the product sector was somewhat offset by a tiny uptick in businesses that provide services, keeping the Canadian economy stable in July.
“Inflation lags the Canadian economic cycle, and there are growing signs that the impact of earlier interest rate increases are working to cool the economy,” said Claire Fan, economist at Royal Bank of Canada, in a note.
According to LSEG statistics, there is a 74% likelihood that the Bank of Canada will maintain its benchmark rate in the upcoming month.
On Friday, the yield on benchmark government debt decreased as the Canadian currency appreciated versus the U.S. The real estate index (.GSPTTRE) increased by 1.0%. In comparison, the rate-sensitive information technology sector (.SPTTTK) gained 1.7% as expectations for a pause in interest rate increases were raised by lower-than-expected U.S. inflation and domestic GDP statistics.
In the United States, consumer expenditure climbed in August, but underlying inflation slowed; prices over the previous year, excluding those for food and energy, slowed to about 4.0%.
Consumer discretionary shares (.GSPTTCD) increased 1.0% on a 10.6% increase in Aritzia Inc (ATZ.TO) shares as the garment design company exceeded expectations for its most recent quarter results.
The materials sector (.GSPTTMT), which comprises firms that mine precious and base metals and produce fertilizer, increased by 0.5%, following the trend of most metal prices.
As statistics revealed a slowdown in U.S. core price inflation in August, gold prices increased, supported by a weakening dollar and falling Treasury rates. As oil prices fell, the energy sector (.SPTTEN) lost earlier session gains and fell 0.6%.
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