May 22nd, 2024

S&P/TSX composite posts small gain, U.S. markets mixed amid ongoing rate-cut worries

By The Canadian Press on April 18, 2024.

A signboard displays the TSX close in Toronto on Friday, June 4, 2021. THE CANADIAN PRESS/Frank Gunn

TORONTO – Canada’s main stock index gained just over 50 points on Thursday, helped by strength in utilities and base metals, while U.S. markets were mixed.

The prospect of interest rates in the U.S. remaining higher for longer continues to cast a shadow over equity markets, fostering cautious sentiment, said Ryan Crowther, portfolio manager at Franklin Templeton Canada.

“I think the fixation on rate cuts is driving the narrative,” he said.

In New York, the Dow Jones industrial average was up 22.07 points at 37,775.38. The S&P 500 index was down 11.09 points at 5,011.12,while the Nasdaq composite was down 81.87 points at 15,601.50.

The S&P/TSX composite index closed up 52.39 points at 21,708.44.

While the TSX got a bit of a boost from strength in gold and copper on Thursday, rate angst is weighing on markets on both sides of the border, said Crowther, even though the Bank of Canada looks set to cut rates sooner than the U.S. Federal Reserve.

“The narrative around rates … it’s dominated investor sentiment across both the U.S. and Canada,” he said.

Economic data in the U.S. has continued to surprise to the upside, said Crowther. Because of that, investors have had to pare back their expectations for how many rate cuts the Fed could make this year.

“It’s a good news story economically, but bad news for people banking on rate cuts coming from the Fed,” he said.

“Investors have had to come to terms with this inflationary component that’s clearly not going away.”

Reports on Thursday showed the U.S. economy continues to be stronger than expected, with fewer workers applying for unemployment last week than expected, mid-Atlantic manufacturing growth accelerating, and sales of previously occupied homes falling by less than expected last month. Treasury yields rose following the reports.

As U.S. earnings roll in, the results so far have been generally positive, said Crowther.

“That’s fundamentally good if we’ve got the underlying businesses performing well,” he said.

“That’s really what we care about when we’re thinking about investing.”

First Quantum Minerals saw its stock rally more than nine per cent Thursday after reports about companies considering bidding for a stake in the company’s Zambian copper mines, noted Crowther.

The Canadian dollar traded for 72.65 cents US compared with 72.50 cents US on Wednesday.

The May crude oil contract was up four cents at US$82.73 per barrel and the May natural gas contract was up five cents at US$1.76 per mmBTU.

The June gold contract was up US$9.60 at US$2,398 an ounceand the May copper contract was up 10 cents at US$4.44 a pound.

– With files from The Associated Press

This report by The Canadian Press was first published April 18, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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