TORONTO — Canada's main stock index gained almost 100 points Tuesday as strong performance in the energy sector was dragged down by losses in telecom and utilities, while U.S. markets also rose.
The S&P/TSX composite index was up 96.08 points at 20,725.00.
In New York, the Dow Jones industrial average was up 265.67 points at 34,156.69. The S&P 500 index was up 52.92 points, or 1.3 per cent, at 4,164, while the Nasdaq composite was up 226.34 points, or 1.9 per cent, at 12,113.79.
Markets Tuesday fluctuated, then rose throughout the last half of the afternoon in reaction to comments from Federal Reserve chairman Jerome Powell, said Allan Small, senior investment adviser at iA Private Wealth.
Powell reiterated that inflation will take time to moderate, with the labour market remaining strong, but he also said he thinks inflation will decline significantly this year.
After spiking then dipping in the early afternoon, markets rose again to finish the day by more than erasing Monday's losses.
“It just seems like this market is itching to continue this investment in the rebound,” Small said.
Markets tend to take the path of least resistance, which right now is trending upward, said Small.
Though markets have been pricing in rate cuts later in 2023, and a recent Bank of Canada survey found many Bay Street analysts expect these cuts, Bank of Canada governor Tiff Macklem was firm in his messaging Tuesday that the central bank is pausing, not pivoting.
He said the bank has paused its hikes to determine whether it’s even raised rates enough to get inflation to its target level.
Small said only time will tell whether central banks will cut interest rates this year, as there are many economic unknowns that they have to contend with still this year. Macklem acknowledged that uncertainty in his remarks in Quebec City on Tuesday, and said if inflation doesn’t continue to cool the way it’s expected to, the bank will have to raise rates more.
The Canadian dollar traded for 74.43 cents UScompared with 74.39 cents US on Monday.
The TSX energy index rose 2.78 per cent Tuesday as oil prices were up.
The March crude contract was up US$3.03 at US$77.14 per barreland the March natural gas contract was up 13 cents at US$2.58 per mmBTU.
The April gold contract was up US$5.30 at US$1,884.80 an ounce and the March copper contract was up five cents at US$4.08 a pound.
This report by The Canadian Press was first published Feb. 7, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press