Canada’s main stock index edged higher Monday led by gains in technology and battery metals, while U.S. markets were mixed.
Markets were in “wait and see mode” Monday ahead of key economic data expected later in the week, said Craig Fehr, investment strategist at Edward Jones.
The S&P/TSX composite index was up 43.12 points at 20,585.15.
In New York, the Dow Jones industrial average was down 55.69 points at 33,618.69. The S&P 500 index was up 1.87 points at 4,138.12,while the Nasdaq composite was up 21.50 points at 12,256.92.
The volatile market last week was driven by the latest Federal Reserve announcement as well as jobs reports in the U.S. and Canada, Fehr noted. The spotlight this week is the U.S. inflation data to be released Wednesday, he said.
Between that and Canada’s next look at inflation data to be released on May 16, soon investors will have the “full inflation picture,” said Fehr.
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A lot is hinging on inflation data, as has been the case for many of incremental economic data releases as markets remain focused on the macro, he said. With the Federal Reserve having shifted its tone and indicating it’s open to a rate pause with the right data, markets are expecting slight moderation in inflation but will also be watching for the underlying drivers of the numbers, he said; of particular interest will be auto prices, shelter prices and core service prices.
“Services has been the strongest, stickiest part of inflation pressures for a while,” Fehr said.
The most recent data on the labour market showed that it remains incredibly healthy, but some softness is starting to emerge, said Fehr.
“The Bank of Canada’s already moved to the sidelines. Markets are eyeing the Fed to do the same as early as next month, and so much hinges on inflation continuing to soften,” he said.
Meanwhile, earnings so far in the U.S. and Canada have been slightly better than feared, Fehr said, leaving investors cautiously optimistic _ with emphasis on the caution.
“I think we’re going to have to work our way through some of these additional risks, earnings being one of those, before we see markets really get a lot of confidence that recovery is going to … be underway,” he said.
The Canadian dollar traded for 74.88 cents US compared with 74.48 cents US on Friday.
The June crude contract was up US$1.82 at US$73.16 per barreland the June natural gas contract was up 10 cents at US$2.24 per mmBTU.
The June gold contract was up US$8.40 at US$2,033.20 an ounceand the July copper contract was up five cents at US$3.93 a pound.
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