TSX jumps, ends near a 6-week high after soft US inflation data
By Nikhil Sharma and Divya Rajagopal
(Reuters) -Canada's main stock index closed on Thursday at its highest level in more than a month as cooler-than-expected U.S. inflation data raised hopes the Federal Reserve would start cutting interest rates in September.
The S&P/TSX composite index was up 193.90 points, or 0.87%, at 22,544.13.
Real estate stocks led sector gains with a 2.61% jump, hitting the highest since April. Healthcare shares rose 1.3%. Energy stocks jumped 2.56%, in tandem with oil prices. [O/R]
The materials sector hit its highest in more than a month before paring gains. Broadly the sectoral indices closed up in green.
Among individual stocks, MTY Food Group shares closed up 11.12% to top the Toronto Stock Exchange after the company posted higher second-quarter profit. The stock hit a three-year high during the session as its quarterly numbers beat analyst expectations. Among other top gainers were precious metals miners NovaGold Resources which closed up by 9.70% and Pan American Silver, which ended 6.10% higher.
U.S. consumer prices surprisingly fell 0.1% in June, boosting the market's expectations for a rate cut in September to a 90.8% chance from 68.5%. [0#FEDWATCH]
On Tuesday, Fed Chair Jerome Powell noted in congressional testimony that inflation was coming down and the economy was no longer overheated.
"I don't think they could have expected much better than this, but whether or not they're going to cut is going to depend on some other factors between now and then coming into effect," said Michael Sprung, president at Sprung Investment Management.
Back home, the yield on the Canadian 10-year benchmark fell 10 basis points after the inflation report, mirroring its U.S. counterpart.
Investors will now focus on the U.S. producer price index (PPI) data on Friday, alongside the beginning of the earnings season.
(Reporting by Nikhil Sharma in Bengaluru; Editing by Shreya Biswas and David Gregorio)
