Toronto index jumps on commodities boost

·2 min read
The facade of the original Toronto Stock Exchange building is seen in Toronto

By Bansari Mayur Kamdar

(Reuters) - Canada's main stock index rose more than 1% on Monday as commodity shares tracked gains in oil and metal prices, while receding bets of a super-sized interest rate hike from the Federal Reserve improved sentiment globally.

At 10:10 a.m. ET (14:10 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 293.82 points, or 1.6%, at 18,688.27.

The energy and materials sectors gained 4.8% and 1.6%, respectively, as the dollar pulled back after a red-hot rally.

Miners also drew support from a rise in copper prices after top consumer China's latest effort to avert a potential crisis in its real estate market, while a jump in crude oil due to concerns over gas supply from Russia aided energy stocks. [O/R] [MET/L] [GOL/]

"The markets are oversold ... we have a meaningful bounce off that," said Robert McWhirter, president at Selective Asset Management Inc.

"The U.S. dollar was a bit weaker today, which then means that a lot of the dollar-based commodities like oil and gold are moving up."

Commodity stocks have posted sharp falls this month, buffeted by a surge in the dollar, fears over interest rate hikes and COVID-19 curbs in China. So far in July, energy stocks have lost nearly 6% and material stocks have declined 5%.

The financials sector was up 1.7% after losing nearly 5% last week when a shock 100-basis-point interest rate hike at home raised fears about mortgage growth.

European and U.S. markets also advanced on the day as traders scaled back expectations for the Federal Reserve's next interest rate hike to 75 basis points. [MKTS/GLOB]

Focus will be on the June consumer prices data, expected later this week, with analysts surveyed by Reuters estimating that inflation in Canada would hit a four-decade high of 8.3%.

Bank of Canada Governor Tiff Macklem said on Friday he expects inflation to go "a little over" 8% and stay in that range for a few more months.

Among individual stocks, Suncor Energy Inc jumped 4.5% after announcing an agreement with activist investor Elliott Investment Management. The company will start a strategic review of its downstream business and consider alternatives, including a sale of the unit, under the deal.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Aditya Soni)

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