TORONTO — Canada's main stock index gained almost one per cent on Thursday, while U.S. markets also rose, led by a 1.5 per cent gain on the Nasdaq.
The S&P/TSX composite index closed up 200.60 points at 21,794.56.
In New York, the Dow Jones industrial average was up 130.30 points at 38,791.35.The S&P 500 index was up 52.60 points at 5,157.36, setting its 16th record so far this year, while the Nasdaq composite was up 241.83 points at 16,273.38.
Markets regained their momentum after the heads of both the U.S. Federal Reserve and the European Central Bank made comments that sparked more optimism that interest rate cuts could start soon, said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
“Both of those things are obviously leading to a risk-on type environment for the market here today,” he said, noting that markets are pricing in June for rate cuts to start in the U.S., and are expecting almost four cuts for the whole year.
Fed chair Jerome Powell spoke before the Senate banking committee, saying the central bank is looking for additional data showing inflation is cooling before it cuts rates.
However, Powell said the central bank is “not far from” achieving the confidence it wants in order to start cutting.
Meanwhile, Christine Lagarde, leader of the European Central Bank, said she's seeing good progress on inflation, and suggested the bank could start cutting in June.
The comments have given more confirmation to markets that cuts could begin around the middle of the year, said Archibald.
“Risk assets are really across the board on this idea that policy is going to be easing in the future,” he said.
The Bank of Canada will likely follow the Fed’s path despite its weaker economy, added Archibald.
Next week will see a string of notable economic data in the U.S., namely measures of inflation and retail sales, he said.
And this Friday will see new labour market data in both the U.S. and Canada, which Archibald expects to show continued signs of slowing.
“All these things, in my mind, continue to point towards this idea that the economy is holding up relatively well,” he said.
Amid the outsized strength in major tech stocks, this year the market has been showing signs of broadening, said Archibald, who says that’s a healthy sign.
The Canadian dollar traded for 74.22 cents US compared with 73.92 cents US on Wednesday.
The April crude contract was down 20 cents at US$78.93 per barrel and the April natural gas contract was down 11 cents at US$1.82 per mmBTU.
The April gold contract was up US$7.00 at US$2,165.20 an ounce and the May copper contract was up five cents at US$3.93 a pound.
-- With files from The Associated Press
This report by The Canadian Press was first published March 7, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
