S&P/TSX composite ekes out gain Thursday, U.S. stock markets rise

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Bank of Canada holds key interest rate steady at 5%
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Canada’s main stock index eked out a gain Thursday as base metals helped offset weakness in energy, while U.S. markets rose.

The S&P/TSX composite index closed up 4.30 points at 20,278.51.

Big technology stocks helped lift U.S. markets, led by a 1.4-per-cent gain on the Nasdaq.

In New York, the Dow Jones industrial average was up 62.95 points at 36,117.38. The S&P 500 index was up 36.25 points at 4,585.59, while the Nasdaq composite was up 193.28 points at 14,339.99.

Markets took a turn for the better in November on hopes that North American central banks are finished with interest rate hikes. This week, investors are eyeing a key report on the U.S. job market to be published Friday that could provide insight into what the U.S. Federal Reserve’s next move will be.

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The Fed is set to meet next week and is widely expected to hold its overnight rate where it is.

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Though central banks are still leaving the door open to rate hikes if necessary, they’ve been taking on a less hawkish stance as inflation continues to moderate, said Konstantin Boehmer, co-head of fixed income at Mackenzie Investments.

“Central banks have shifted their tone quite decisively more dovish,” he said.

On Wednesday, the Bank of Canada held its key interest rate steady at five per cent, saying higher interest rates are “clearly restraining spending.”

As long as economic data continues its steady softening, the Fed could be on tap to cut in the spring, Boehmer said.

“If things play out as expected right now, the chance that we will see rate cuts by the May meeting … is quite high.”

The next couple of inflation prints are expected to be meaningfully lower, he said, especially with the continued decline in gas prices.

While the Canadian consumer is more vulnerable to interest rates, Boehmer thinks Canada isn’t likely to lead the U.S. when it comes to rate cuts.

The Canadian dollar traded for 73.55 cents US compared with 73.67 cents US on Wednesday.

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The January crude oil contract was down four cents at US$69.34 per barrel and the January natural gas contract was up two cents at US$2.59 per mmBTU.

The February gold contract was down US$1.50 at US$2,046.40 an ounce and the March copper contract was up six cents at US$3.80 a pound.

— With files from The Associated Press

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