Strength in energy stocks helped Canada’s main stock index gain more than 100 points on Monday, while U.S. stock markets were in the red.
The S&P/TSX composite index was up 169.09 points at 19,587.32.
While activity was relatively slow Monday ahead of next week’s long weekend, all eyes will be on the latest inflation data drop on Tuesday, said Kevin Headland, chief investment strategist at Manulife Investment Management.
“It looks like consensus is that it’s going to be materially lower, at least on just CPI,” said Headland.
Statistics Canada is set to release its consumer price index report for May on Tuesday, providing the most up-to-date inflation reading ahead of the Bank of Canada’s interest rate decision on July 12. BMO is forecasting Canada’s inflation rate fell a full percentage point to 3.4 per cent in May.
If predictions prove accurate, Headland said that could raise optimism that the Bank of Canada will hold steady rather than raising its rate again.
“There’ll be, I guess, a wait-and-see approach,” he said.
“It can be just a signal the Bank of Canada can resume their pause again. Right now it’s kind of a coin flip.”
Earlier this month, the Bank of Canada announced a quarter of a percentage point rate hike that brought its key rate to 4.75 per cent — the highest it’s been since 2001.
“I think the TSX was probably a bit surprised the Bank of Canada decided to go another rate hike at the last meeting coming off their pause,” said Headland, noting the markets could also react if predictions of a looming recession prove accurate in the next six months.
In New York, the Dow Jones industrial average was down 12.72 points at 33,714.71. The S&P 500 index was down 19.51 points at 4,328.82, while the Nasdaq composite was down 156.74 points at 13,335.78.
Headland said the lack of activity south of the border was likely in response to uncertainty surrounding the U.S. Federal Reserve’s direction after pausing its rate this month.
“It looks like almost a three-quarter per cent chance that the Federal Reserve will put another rate hike, but that is actually a month to date from today, so still a lot of information to come through before that date.”
The Canadian dollar traded for 76.04 cents US, compared with 75.76 cents US on Friday.
The August crude contract was up 21 cents at US$69.37 per barrel and the August natural gas contract was up five cents at US$2.89 per mmBTU.
The August gold contract was up US$4.20 at US$1,933.80 an ounce and the September copper contract was down a penny at US$3.80 a pound.
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