Loonies with the effigy of King Charles on them are struck at an event celebrating the first coin struck at the Royal Canadian Mint in Winnipeg, Tuesday, Nov. 14, 2023. THE CANADIAN PRESS/John Woods
Toronto - Canada's primary stock index saw a slight increase on Monday, supported by strength in the energy, technology, and base metal sectors. The S&P/TSX composite index closed up by 62.76 points at 22,069.76. Meanwhile, U.S. stock markets also experienced gains, with the Dow Jones industrial average rising by 69.05 points to 38,868.04. The S&P 500 index was up by 13.80 points at 5,360.79, while the Nasdaq composite rose by 59.40 points to 17,192.53.
According to Angelo Kourkafas, senior investment strategist at Edward Jones, the TSX benefited from a rally in oil prices, which recovered from recent concerns about demand. Kourkafas noted that as the summer months approach, demand appears to be stable, with no significant decline in economic activity observed. The Bank of Canada's interest rate cut last week signaled a positive outlook for investors, suggesting a potential soft landing.
In the U.S., markets remained subdued as investors awaited key events scheduled for the week, including the latest inflation data and the Federal Reserve's interest rate decision. Kourkafas highlighted that these events could lead to some volatility or adjustments in interest rate expectations. While the expectation is for the Fed to maintain steady rates, investors will closely monitor the Fed's projections for the remainder of the year, particularly given recent economic uncertainties.
Despite expectations for rate cuts in 2024, stronger-than-expected economic reports have raised uncertainty about the timing of the Fed's actions. Kourkafas noted that while inflation remains somewhat persistent, the April reading was encouraging. Unlike central banks in Canada and Europe, the Fed is cautious about cutting rates, preferring to wait for more positive economic data.
Nvidia, a leading semiconductor company, saw a modest increase on Monday following a 10-for-one stock split. Kourkafas mentioned Nvidia's pivotal role in the AI sector, driving investor enthusiasm.
In currency markets, the Canadian dollar slightly weakened against the U.S. dollar. Crude oil prices rose, with the July contract up by US$2.21 at US$77.74 per barrel, while the July natural gas contract was down by one cent at US$2.91 per 1,000 cubic feet. Gold prices also saw a slight increase, with the August contract up by $2 at US$2,327 per ounce, and copper prices rose by six cents to US$4.54 per pound.
